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2023 M&A outlook for insurance firms 

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The intensity of mergers and acquisitions activity across the insurance sector has been widely reported on recently for very high deal volumes and record multiples. There were several notable deals in the first half of 2022 that could perhaps set a trend for future M&A transactions.  These include the sale of Global Risk Partners to US based Brown & Brown Inc. and the acquisition of Clear Insurance Management Ltd by Goldman Sachs Asset Management. Both were strategic financial transactions with undisclosed sums, that demonstrate the buy and build model of progressively adding smaller businesses to a well-established business. 

During the second half of 2022, there were a number of factors that slowed M&A activity down including; inflation and interest rates and the looming threat of recession, which made both buyers and sellers pull back. “According to the mergers and acquisitions specialists, there were 107 transactions in 2022, down 27% on the record-breaking year before” (M&A slips back from 2021 record to £4bn in 2022 - Insurance Age). Buyers took advantage of the slowing deal pace by reducing purchase prices and sellers held out for the high valuations evidenced in 2021 and the early part of 2022.

This reduction in deals may reflect the saturation of the UK and Irish markets, particularly in the availability of broker targets.

Deals are still going ahead and predictions look more positive as we progress through 2023, but what is driving activity now?

Factors driving M&A activity

Whilst M&A activity has slowed from the record setting highs of 2021, on a geographical scale the UK and Ireland are still leading the way in European insurance M&A deals.

Circumstances driving M&A activity across the general insurance sector are likely to change depending on a number of different economic, political, technological and regulatory factors. These are just some of the macro-economic influences that can impact the volume, timeline and rates for M&A deals within the sector.  Colin Mckenna, Client Solutions Director at IDEX commented “We are still seeing good growth from the medium sized brokers, which is creating significant interest to acquire them” although Colin warns “that brokers shouldn’t just be buying for growth, they should be buying businesses that compliment what they already have.”

At the moment, the market is seeing activity being driven by the following factors:

  • Strategic decision making – the need to build operational efficiency, new capabilities and invest in diversification.

  • Regulation is a motivation for consolidation – the escalation of regulatory requirements from the FCA is driving smaller firms to seek larger buyers in order to benefit from internal compliance teams and avoid additional cost and resource.

  • Fair value – this is likely to hit bigger brokers harder who will be looking to engage with smaller brokers to redress the financial balance.

  • Environmental, Social and Governance - businesses with a strong ESG angle continue to drive premium rates in deals.

  • Partnerships – there is continued appetite to create new partnerships and alliances in order to broaden offerings and gain access to a new and varied client portfolio.

  • Digital transformation and technology – the increasing pressure to improve customer experience to create and maintain a competitive advantage and create scalable and cost efficient platforms for growth, has never been so important.

The future for M&A

It has been noted across a range of reports that strong M&A activity is expected to continue throughout 2023 across multiple sectors, despite the economic down turn. A recent CEO survey by PWC reported that 63% of UK company chiefs said they do not plan on delaying deals in the coming year(UK M&A activity in 2022 cools down from record high, but PwC UK remains cautiously optimistic for the year ahead). Client Solutions Director at IDEX, Colin Mckenna agrees “Although activity will undoubtedly be affected by the economic crisis, the insurance sector is still deemed to be a very profitable area to invest in ”The buy and build model will remain the focus as acquiring brokers extend their reach to smaller and medium sized businesses.

The disruption caused by pricing regulation and claims inflation, together with the fierce competition that exists in the motor and home insurance markets could well drive M&A activity.

It will be the stronger sector participants with long-term outlooks and strategic vision, that will be able to take advantage of the sliding valuations and make what were previously unaffordable acquisitions, now successful. Private Equity firms have significant resources to deploy also.

The Lloyds London insurance Marketplace, with more than 50 leading insurance companies and a global network of over 4,000 local coverholders, will continue to see interest from strategic and financial investors. General economic uncertainty is likely to remain which will continue to affect deal transaction timelines and cause disparities between bids and valuations, as sellers try to hold on to previous valuations and buyers start to think in “new world terms”.

These unsettled, uncertain times can be ideal for opportunistic acquisitions, enabling businesses with strong balance sheets to expediate growth plans and be in a stronger position to move quickly should the right deal arise. 


Global M&A Industry Trends: 2023 Outlook : PwC

2023 Insurance M&A Outlook | Deloitte US

Insurance M&A | Bain & Company

M&A slips back from 2021 record to £4bn in 2022 - Insurance Age

Mergers & Acquisitions (M&A) in the Global Insurance Industry. Five Growth Factors (

UK&I leads way in European insurance M&A deals – but has activity reached its peak? (

Briefing: Unwieldly regulatory compliance driving broker consolidation surge | Analysis | Insurance Times

FS M&A Market Outlook - Q1 2023 | Deloitte UK

M&A Report 2022: United Kingdom | IFLR

UK M&A activity in 2022 cools down from record high, but PwC UK remains cautiously optimistic for the year ahead