In the first edition of FTI Consulting’s European Insurance M&A Barometer Report for 2023, the firm highlights a robust surge in insurance deal activity across the region during the first half of the year.
The report provides insights into key trends in the insurance mergers and acquisitions (M&A) market, showcasing notable transactions and key players in the industry.
Despite the challenges posed by rising interest rates, European insurance M&A activity continued its upward trajectory in H1 2023, breaking records with 267 deals announced, compared to 219 in H1 2022 and 199 in H1 2021.
While many of these deals were relatively small, several significant transactions stood out, including the €2.3 billion sale of Liberty Mutual’s Iberian business to Generali and the $1.1 billion sale of Argo to Brookfield Reinsurance.
The report underscores the sustained investor enthusiasm in the European insurance sector, particularly in insurance distribution.
H1 2023 witnessed a surge in insurance intermediaries and service providers, with 229 announced transactions, up from 186 in H1 2022. This segment accounted for a substantial 86% of Europe’s deal volume during the period.
Private equity (PE) investors, attracted by the sector’s low capital requirements and scalability, increased their activity by 35%, with 164 announced transactions in H1 2023 compared to 121 in H1 2022. Broker consolidation platforms saw value creation primarily through add-ons and bolt-ons.
Strategic buyers also played a significant role, with 103 transactions announced in H1 2023, compared to 98 in H1 2022. Notably, high-quality businesses increasingly opted for selective, high-conviction parties, streamlining the M&A process for efficiency and effectiveness.
In terms of business types, insurance distribution and service providers were in high demand, accounting for 56% of deal activity in the sector, with 126 transactions compared to 90 in H1 2022.
International platforms and regional consolidators strengthened their positions with multiple acquisitions.
In the carriers sector, property and casualty (P&C) insurance saw a substantial increase, with 20 announced transactions compared to 13 in H1 2022. This growth was driven by a continued hard market for some business classes and improved underwriting profitability.
Regionally, the UK and Ireland led the European market for insurance M&A, with 112 announced transactions in H1 2023, followed by France with 20 deals.
The Benelux region experienced significant activity, particularly among PE-backed platforms. Italy saw a decline in deal volumes, while Iberia emerged as the most active market in continental Europe.
The Nordics and the DACH region (Germany, Austria, Switzerland) also witnessed increased deal volumes, indicating ongoing consolidation opportunities.
Central and Eastern Europe (CEE) rebounded from the previous year, with 13 announced transactions in H1 2023.
Despite macroeconomic uncertainties and higher borrowing costs for distribution consolidators, the report suggests that the strong momentum in insurance M&A is likely to continue for the rest of the year, albeit with some potential restraint as the longer-term impact of economic conditions becomes clearer.
