According to the latest insights from MarshBerry, July 2024 witnessed a shift in the UK insurance distribution merger and acquisition (M&A) landscape, marked by the installation of a new Labour Government and a reduction in the number of deals announced.
The month recorded 11 new transactions involving ten separate buyers, including two significant deals where the targets employed over 100 staff. As of July 31, the year-to-date transaction count in the sector stands at 85, representing a 9% decrease compared to the 93 deals recorded by the same point in 2023.
According to MarshBerry, while transaction volumes in 2024 are slightly behind last year’s record levels, the overall deal count for the year is still projected to approach 150. However, the average size of announced deals continues to decrease. MarshBerry notes that this trend is expected to continue as the market adjusts to evolving conditions.
The upcoming Labour Autumn Budget, scheduled for October 30, has generated significant attention, with speculation that it may include an increase in the capital gains tax rate. As a result, many private sellers currently in discussions to sell their businesses are aiming to finalise deals before this date.
MarshBerry predicts an increase in deal volumes leading up to the budget. However, for sellers who have not yet initiated sale discussions, it may now be too late to secure a favourable deal before the potential tax changes. It remains uncertain whether any tax increase would take effect from the October budget or from the start of the next tax year in April 2025.
Private equity (PE) and PE-backed buyers have accounted for 36 of the transactions in 2024, representing 42% of the total. This figure is consistent with 2023 but remains below the historical average.
MarshBerry attributes this to the perceived greater opportunities in continental consolidation, as evidenced by both Brown & Brown and Optio Group announcing their largest non-UK deals to date during July.
This trend highlights the challenges PE faces in achieving high returns in the increasingly consolidated domestic market. Nevertheless, PE capital was behind eight of the 11 new deals in July 2024, underscoring its continued importance in driving sector M&A activity.
Despite the announcement of three new deals involving specialty distributors—defined by MarshBerry as managing general agents (MGAs) and wholesale brokers, including Lloyd’s brokers—the segment has only accounted for 9% of all announced deals in 2024 as of 31 July.
This is significantly below the historical average of around 20%. The MGA segment has seen relatively limited M&A activity in 2024, with just six deals announced compared to 18 at the same stage in 2023.
MarshBerry has also previously noted that several active PE-backed acquirers in the insurance sector are themselves “in play” and are expected to refinance in 2024 or sell to strategic buyers as part of a broader trend of “consolidation of consolidators.”
The recent acquisition of Inflexion-backed David Roberts & Partners (DR&P) by BMS Group was cited as a notable example. BMS, which has previously focused on overseas M&A, is now turning its attention to domestic consolidation. Following this transaction, BMS will employ over 1,300 staff and manage more than $7 billion in gross written premiums (GWP).
MarshBerry anticipates that similar consolidations will become more common as PE-backed platform businesses, which have grown rapidly through M&A, begin to merge and form larger entities.
BMS Group’s acquisition of David Roberts & Partners (DR&P) from PE backer Inflexion was a significant deal in July. DR&P employs approximately 400 staff across 25 offices in the UK and Europe, handling over £620 million in GWP.
Liberty Mutual’s sale of Northern Irish personal lines broker Hughes Insurance to Markerstudy reflects the ongoing trend of insurers divesting their distribution businesses. MarshBerry notes that this follows a similar move by Allianz, which sold Premierline to Academy in March 2024.
Assured Partners completed the acquisition of Lloyd’s broker Harman Kemp through its Accretive Insurance Solutions unit. Harman Kemp specialises in placing binding and delegated authorities for a predominantly North American client base.
MarshBerry suggests that as the year progresses, the insurance M&A market will likely continue to see activity driven by both strategic acquisitions and the consolidation of PE-backed firms, with potential impacts from the upcoming Autumn Budget.
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