The UK insurance mergers and acquisitions (M&A) market saw a subdued start to 2025, with only three deals announced in January – the lowest number recorded in a single month since 2017, according to MarshBerry.
This follows a record-breaking 2024, in which 152 transactions were completed, narrowly surpassing the 151 deals recorded in 2023.
Historically, MarshBerry notes that January has not been a slow month for M&A in the sector, with an average of 11 deals announced in the first month of the year since 2016. While the low activity may be a temporary anomaly, the sector has typically averaged ten deals per month over the past eight years.
MarshBerry also notes that 9.4% of all UK sector transactions since 2016 have been announced in January, making this year’s start an exception rather than a trend.
The company’s last M&A report revealed that the UK insurance distribution sector reached its highest level of 2024 in November, with 18 new deals reported in total.
Year-to-date (YTD) through November, the total number of transactions stands at 135, just two shy of the 137 deals recorded at the same point in 2023.
Several factors could explain the reduced deal volume. MarshBerry said that many transactions are completed at or near month-end, with announcements often coinciding with internal communications to employees. As a result, some UK buyers avoid finalising deals at the end of December or early January, opting instead to announce them at the end of January.
Additionally, changes in control for UK deals require approval from the Financial Conduct Authority (FCA), and anecdotal evidence suggests that the approval process may have slowed in recent months, delaying some transactions that would have otherwise been completed.
Despite the slowdown in January, the total estimated value of all announced deals in 2024 reached £4.1 billion, slightly above the £3.9 billion recorded in 2023. However, while deal volumes have remained high, average transaction values have not increased significantly.
Domestic consolidators have been completing a higher number of smaller acquisitions to sustain growth, as the availability of medium-sized acquisition targets declines. At the start of 2024, there were 659 UK insurance distribution groups with ten or more employees. By year-end, that number had fallen to 604 due to sector consolidation.
Cross-border activity has also increased, with 20% of UK insurance M&A transactions in 2024 involving an overseas buyer. In total, 16 separate overseas firms acquired UK insurance businesses last year.
Conversely, UK buyers have also expanded internationally. Specialist Risk Group, one of the most active acquirers in 2024, announced its largest deal to date in January 2025 – an agreement with Germany’s Ecclesia to acquire the group’s Dutch and Belgian assets. As part of the transaction, Ecclesia will take a shareholder position in Specialist Risk Group.
While the slow start to 2025 raises questions about short-term deal activity, the broader trend of international expansion and industry consolidation suggests that UK insurance M&A will remain active in the year ahead.
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