The UK insurance distribution market saw a record number of deals in 2024, with 152 transactions announced, according to Marshberry’s managing director, John Nisbet (pictured).
Of these, 21% involved overseas buyers, with 32 deals spanning 18 different countries. US-based firms played a significant role, contributing to the increase in cross-border acquisitions, Nisbet said.
Despite a competitive market, demand for UK insurance businesses remains high, and international buyers continue to seek opportunities.
For US companies, the UK market offers several advantages. The shared language and similar business culture make it a convenient option for expansion, while the UK’s position as a global insurance hub provides additional opportunities. Many US brokers already have operations in the UK, particularly through Lloyd’s of London, which facilitates their entry into the market.
According to Nisbet, this trend of overseas buyers increasing their presence in UK insurance acquisitions is expected to continue in 2025. US firms are likely to explore other European markets for consolidation, where additional targets may be available. Similarly, buyers from Australia and Asia are showing growing interest in the UK, recognising it as an attractive market for expansion.
Meanwhile, the rise in domestic consolidation in the UK insurance market is creating challenges for private equity (PE) investors, Nisbet said.
As the supply of available targets decreases, focusing solely on the UK may no longer be a viable strategy for some firms. To maintain growth, PE-backed companies will need to pursue opportunities outside the UK, broaden their acquisition focus, or emphasise organic growth and operational improvements.
While the limited supply of UK insurance businesses may not lead to higher valuations in 2025, the competition for acquisitions is expected to increase. US firms, in particular, will continue to target international markets, and this influx of new buyers could drive more deals. This shift is likely to result in more diverse deal structures, with brokers pursuing vertical integration. However, these deals may also present challenges related to cultural fit and the ability to achieve synergies.
Retirement-driven sales remain a key factor in market consolidation, with the average age of sellers in 2024 being 58. A noteworthy development last year was the increased proportion of deals involving privately held buyers. This suggests that smaller, owner-managed brokers still have opportunities for local M&A activity before larger consolidators become dominant in the market.
In addition, US-backed consolidators are now looking beyond the UK, with a growing focus on Continental Europe for further growth. As the UK market matures, UK firms are likely to expand into other areas, such as health insurance and employee benefits, which offer opportunities for diversification.
