UK most attractive insurance M&A market in Europe – Grant Thornton

The UK is the most attractive market for insurance mergers and acquisitions (M&A) in Europe, according to Grant Thornton.

In a report on global insurance M&A, the accounting firm highlighted the gulf between the number of deals done in the UK and the rest of Western Europe over the past five years.

There were 42 insurance M&A deals completed in the UK in 2013, compared with 11 for all other Western European countries combined, according to figures from Grant Thornton Research and the Insurance Intelligence Center.

The report also said that Lloyd’s would “continue to entice deal-makers”.

The report said: “[The Lloyd’s market’s] global standing and exposure to a highly diverse portfolio of risk regardless of market conditions appeals to international insurers looking to expand their global footprint.

“The similarity in risk profile between the Lloyd’s market and reinsurers or property and casualty specialists remains attractive.”

According to Insurance Intelligence Center figures, 11 Lloyd’s deals were completed in 2013, up from 10 in 2012.

Western Europe accounted for 19% of the global deals between 2011 and 2013. The biggest global market for insurance M&A is North America, which accounted for 61% of deals.

Broking deals dominate

M&A among insurance brokers made up the bulk of acquisition activity between 2011 and 2013, accounting for 55% of global deals.  

The report said: “Distributors present an attractive investment proposition for both cash buyers and private equity houses; the former due to their strategic importance, the latter because brokers are often cash generative.

“Moreover, the lack of exposure to underwriting risk reduces the capital volatility. These tactical acquisitions are also highly beneficial for intermediaries as they allow them to meet their expansion plans.”