There is ’increased saturation in the UK and Irish markets’, warns FTI Consulting
The volume of insurance sector merger and acquisition (M&A) activity across the UK and Ireland may have peaked as the number of deals dropped in 2022, new data has revealed.
This is despite the British Isles leading Europe for the number of M&A deals last year as the continent saw a record number of deals.
Consultancy firm FTI Consulting analysed M&A activity across Europe during 2022 and published its findings in a new report, released yesterday (22 March 2023).
Its figures showed that while the UK and Ireland were the most active counties in Europe for M&A, a total of 177 deals were completed in the year, a decline from 197 in 2021.
“Deal activity in the region may have peaked,” the report explained.
“The decline reflects the increased saturation of the UK and Irish markets, particularly in the availability of broker targets.”
André Frazão, associate partner in the global insurance services practice at FTI Consulting, said investors had started to “turn their attention” to continental Europe.
“Activity levels in the UK and Ireland have traditionally been very strong, particularly in the insurance distribution sector, but it is also an increasingly saturated market,” Frazão added.
“During 2022, investors turned their attentions to continental Europe, where all the markets in the region, with the exception of central and eastern Europe, saw an increase in activity – a trend that is likely to continue in 2023.”
New European peak?
Figures revealed that investor appetite for insurance assets across Europe achieved a new annual record in 2022, with a total of 435 deals recorded during the year.
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This is compared to 379 in 2021 and 285 in 2020, the report said.
It also revealed that private equity investors maintained a strong appetite for insurance M&A, accounting for 60% of Europe’s deal volume in 2022.
There was also an uptick in deal activity from strategic buyers, who accounted for 40% of transactions in 2022 – this was up by 22% on the previous year.
“Speculation that valuations would hit a new peak in 2022 came to pass, with several transactions making it to the finish line at record high multiples,” Frazão added.
“Broker consolidator activity continues to be underpinned by the large spread between the add [or] bolt-ons target’s purchase multiple and the trading multiple for consolidator platforms.”
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