Top 50 Brokers: Broking is no longer local – global acquirers are here to stay

Global economic expansion and hard market rate conditions continue to benefit the insurance broking industry worldwide.

With global interest rates dropping and capital markets stabilising, the trend of US-based acquirers taking an interest in UK and European brokers may push an already active UK M&A market even further. Don’t look now, but US acquirers are here to play – and here to stay.

The insurance broking industry has already witnessed a significant uptick in M&A activity – particularly in the US, where approximately 7,100 insurance brokers have sold over the past 10 years.

This equates to a 10-year compound annual growth rate (CAGR) of 6.8%. The prior decade only saw a 2.6% CAGR, according to S&P and MarshBerry data.

In Q3 2024, there were 490 announced insurance broker M&A transactions in the US – about 8% higher than the same period in 2023. Much of this action has been driven by private capital-backed buyers, accounting for over 73% of deal activity.

This acquisitive trend in the US has had a significant impact on the global insurance market, with ripple effects extending to the UK and Europe.

As US insurance brokers consolidate their power, they are increasingly looking to expand their operations internationally.

The highly fragmented UK and European insurance broking market is ripe with opportunity for US firms looking to expand and grow.

Targeting and acquiring established insurance brokers in these regions allows larger US brokers to tap into new client bases more easily than if they were to start afresh.

Interest from across the pond…or the Channel

However, US-based insurance brokers are not the only ones interested in UK M&A opportunities.

Private equity (PE) or PE-backed buyers are another significant force behind insurance broker consolidation in Europe, accounting for 60% to 70% of transactions for firms worth £25m or more for the last three years.

Nearly 75% of US-based acquirers in Europe are buying UK firms, while more than 25% of UK insurance broker M&A in 2023 had a US buyer.

As US firms expand into the UK and Europe, they bring scale, expertise, more comprehensive product offerings and advanced technological capabilities. They also bring significant financial resources to bear.

This all leads to increased competition, helping to drive strategic alliances within the UK and European markets.

In the UK, this increased competition is putting pressure on local brokers to either consolidate or find ways to differentiate themselves.

The result is consolidation at all levels – from small local books joining forces, to top 10 ranked brokers merging. There is a stream of domestic broker businesses gradually scaling from small to mid-size to national champions and, finally, to pan-European brokers.

Insurance broker M&A deal volumes in the UK hit a record high in 2023 with 151 announced deals.

In 2024, through Q3, the M&A transaction count in the UK stood at 105, with PE-backed buyers responsible for 50 of those deals.

While this activity is down 9% compared to 2023, there was no doubt a rush to close deals before the 30 October Autumn Budget announcement by chancellor of the exchequer Rachel Reeves, due to the potential impact on capital gains tax.

With nearly half the world holding political elections in 2024, there always lies the potential for changes in taxes, tariffs and other fiscal policies which could impact insurance broker M&A.

However, barring any significant deviation from the current economic course, the outlook for 2025 will likely see continued globalisation of the insurance broker market, with UK and European brokers representing the best opportunity for US brokers and investors.