Two months into 2025, merger and acquisition (M&A) activity within the UK insurance distribution sector continues at a slow pace, following a similarly subdued start in January.
While it noted that two months of data does not provide a firm basis to predict long-term trends, MarshBerry said that if 2025 is to approach the record transaction volumes recorded in 2024, the pace of deals will need to accelerate in the coming months.
In its February M&A market update, MarshBerry commented on the low transaction volumes in January, describing the situation as a possible short-term fluctuation. The continuation of this low volume into February raises questions about whether it is another temporary pause or an early indication of a potential slowdown in insurance sector M&A activity this year.
Data compiled by MarshBerry shows that only nine insurance distribution transactions have been announced in the UK so far in 2025. By the same point in 2024, there were 23 transactions. The average monthly volume since 2016 has been 9.6 deals, with only five new transactions announced in February.
MarshBerry’s analysis suggests that the slowdown could be partially explained by some of the most active acquirers focusing on integrating their prior acquisitions or shifting attention to opportunities outside the UK.
In the previous month, MarshBerry noted that the buyer composition comprised:
A relatively small group of highly acquisitive firms, many backed by private equity, historically drives a large share of M&A activity in the sector. MarshBerry’s report highlighted that the ten most active buyers were responsible for approximately 60% of all UK transactions last year, accounting for 55 deals in total.
As of February, only one of these firms, Howden, has announced a UK acquisition in 2025, while none of the top five have completed any new UK deals. However, MarshBerry notes that two of the top five firms have already completed transactions in continental Europe.
Despite the low volume of deals so far, MarshBerry cautioned against drawing conclusions about a broader slowdown in insurance M&A. Many of the structural factors that have driven consolidation in the sector over the past decade remain in place.
MarshBerry also notes that several active buyers have indicated that their acquisition pipelines remain strong, with no reduction in appetite for new transactions. MarshBerry suggests that the next few months may see a higher volume of announcements.
In addition, deal count alone does not fully capture M&A trends, as deal size and strategic significance also play a role. February included one large transaction in the Lloyd’s broking sector, with Miller’s acquisition of AHJ, which had already received significant industry attention.
Looking ahead, tax changes taking effect from April 6, 2025, could influence some transaction decisions, although MarshBerry does not expect these to act as a significant driver of M&A activity before the end of the current tax year.
The increase in the main rate of capital gains tax, from 20% to 24%, was introduced in October 2024, directly affecting sellers of businesses. At the same time, business asset disposal relief increased from 10% to 14%, effective from April 2025, with a lifetime allowance of £1 million.
MarshBerry calculates that the maximum benefit from this relief would be £40,000 per individual seller, which may not be a sufficient incentive for most owners to accelerate deal timelines before the tax year-end.
Employers’ national insurance is also set to rise from April 6, moving to 15%, which MarshBerry notes will immediately increase staffing costs for brokers. This cost pressure, alongside broader economic conditions, could influence profitability and contribute to the strategic considerations driving M&A activity later in the year.
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