UK insurance M&A defies EMEA slowdown

A new report has revealed that M&A activity in the UK’s insurance sector increased last year, despite the wider Europe, Middle East and Africa (EMEA) region seeing a slowdown in dealmaking during 2023.

According to S&P Global Market Intelligence data, there were 156 acquisitions involving UK insurance targets in 2023, compared to 130 in 2022. Conversely, the EMEA region saw deal volume fall from 385 in 2022 to 354 last year.

The decline in insurance dealmaking in EMEA was largely driven by falling activity in some of the typically most active European countries, including Spain, Ireland, France and Italy. According to the report, the decline within EMEA was in line with a wider slowdown in insurance M&A across other global regions.

Over the past five years, the UK has consistently been, by a significant distance, the most active insurance M&A market in EMEA in terms of deal volume. In each of the last five years, deal volume has exceeded 100 transactions, compared to low double-digit volumes in other active countries.

This has been spurred by widespread consolidation in the broker sub-sector. Traditionally highly fragmented and populated by a huge number of small firms, the broker segment has seen significant consolidation over recent years, a trend that continued during 2023.

S&P stated: “As in the US, there is a large number of small brokers and several larger groups with buy-and-build strategies that are keen to snap up smaller rivals.”

Despite this, there have been concerns raised in recent years that broker activity may have passed its peak and that the scale of consolidation seen in the sub-sector is leading to a scarcity of targets. However, S&P said that broker activity is “showing no signs of slowing down” at the start of 2024, citing several acquisitions already announced by consolidator Ardonagh so far this year.

As well as strong broker activity, the report also cited “notable UK carrier acquisitions” during 2023, including RSA Insurance Group’s acquisition of Direct Line Insurance Group PLC's brokered commercial lines business as well as RSA's sale of its UK direct home and pet personal lines operation to Admiral Group PLC.

In addition, the report adds that “the UK pensions risk transfer market is providing fuel for back-book deals” in 2024, citing Rothesay Life’s announcement in March that it is acquiring portfolio of Scottish Widows Ltd's in-force bulk annuity business from Lloyds Banking Group in a £6 billion deal.

Despite the wider drop in EMEA activity, S&P did note that “deal activity was not confined to the UK”, with acquisitive Italian firm Assicurazioni Generali SpA’s €2.3bn acquisition of Liberty Mutual's Spanish business registering the highest disclosed deal value across the region.

Another silver lining for EMEA was the fact that the region’s dealmaking volume for 2023 also remained ahead of pre-pandemic figures from 2019. S&P stated: “Early signs indicate that 2024 will be another active year for insurance mergers and acquisitions both in the UK and elsewhere.”


Read more about the trends defining the UK insurance sector M&A in this in-depth BSR analysis

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