2024 European Insurance M&A Barometer by FTI Consulting

In spite of challenging macroeconomic conditions, the insurance merger and acquisition (M&A) market in Europe remained robust throughout 2024, with a groundbreaking 694 transactions announced, marking a growth of over 20% from the 574 deals in 2023, as per the recent analysis by FTI Consulting, Inc. The company’s 2024 European Insurance M&A Barometer indicates that the market conditions continue to be conducive for further consolidation, particularly within the distribution sector on the continent.

André Frazão, the Head of the EMEA Insurance M&A practice at FTI Consulting, expressed, “2024 witnessed another historic year for insurance M&A transactions, highlighting the market’s strength and adaptability. Despite concerns about a potential slowdown, the United Kingdom and Ireland maintained their lead in deal-making within Europe, boasting the largest insurance market in the region, with numerous brokerage and MGA consolidation platforms. Nonetheless, attention is shifting towards the continent as a new focal point due to the high level of market fragmentation.”

FTI Consulting’s annual report emphasizes the increased interest by private equity (PE) in asset-light insurance operations, leading to larger deal sizes and raised transactional funding. The year 2024 saw a surge of approximately 20% in PE-backed transactions across Europe, totaling 437 deals. The competitive environment, coupled with a limited selection of attractive assets, has intensified competition, propelling asset valuations higher, particularly in sectors like insurance distribution. Furthermore, the number of transactions by non-PE-backed buyers rose from 208 in 2023 to 257 in 2024.

Broker acquisitions continued to dominate, driven by both organic growth and financial arbitrage strategies. In 2024, brokerages and service providers accounted for 627 transactions, representing 90% of all insurance M&A activity in Europe during the year. While the UK and Ireland remained at the forefront with 284 deals, a lack of high-quality targets has shifted investor focus towards continental Europe, where established consolidation platforms and new buy-and-build strategies are emerging. The Iberian region surpassed the DACH region (Germany, Austria, Switzerland) to become the second most active market, with 117 announced deals.

The report also draws attention to evolving trends such as the rise of managing general agents (MGAs) in Europe. More underwriters are teaming up with PE-backed MGAs, and insurers are forming partnerships with specialty MGAs, resulting in valuations that rival or exceed those of traditional brokers. Additionally, continuation vehicles (CVs) from the US have gained popularity in Europe as refinancing tools, allowing PE firms to deploy capital while providing liquidity to existing partners.

As market conditions soften, the possibility of carrier M&A making a comeback is on the horizon, amidst challenges in achieving profitable organic growth. This may impact underwriting performance, potentially accelerating M&A activity and in-market consolidation. Moreover, a growing shift towards a “consolidator-of-consolidators” strategy by major broker platforms may enable them to broaden their global presence.

Mr. Frazão anticipates a continuation of consolidation in 2025, driven by private equity, particularly in the broking sector, despite tougher economic conditions. The year has commenced with a strong deal pipeline, signaling another active year ahead for the European insurance industry.