UK insurance M&A is now increasingly concentrated on specialty firms, as overall dealmaking in the sector shrinks amid a contraction in the broker activity that has previously dominated the market.
According to M&A advisory firm MarshBerry, three of the seven UK insurance distribution deals recorded in August involved MGAs or Lloyds brokers, providing a further signal of the shift towards specialty targets.
In the year-to-date, specialty and wholesale businesses now account for 29 per cent of all UK deals in the insurance sector, the highest proportion recorded by MarshBerry. August’s largest transaction, Tokio Marine HCC's acquisition of Chelmsford-based fleet and haulage MHA Direct Commercial, is described as an illustration of this trend.
The deal, which saw private equity firm CPBE sell out of Direct Commercial after taking an initial stake in the business in 2022, represented the sixth private equity exit of the year so far.
The acquisition of Lloyd's broker Newman Pearce & Partners by Clear Group was the other notable specialty deal. The transaction will see Newman Pearce & Partners combine with Lilley Plummer Risks, extending Clear Group's presence in the London Market.
Across the broader sector, activity has been quiet, with 56 announced deals in the insurance distribution market so far this year - a 16 per cent drop from the same point in 2025. MarshBerry data showed that there were just 18 deals announced between June and August, the lowest figure for a summer since 2017.
According to MarshBerry, this pattern is not seasonal, with summer deals accounting for 24 per cent of the 1,200 tracked since 2016. Marshberry says that the sustained dip in activity has been ongoing for around 18 months and can therefore not be dismissed as a temporary lull.
Despite the drop in activity, MarshBerry says that buyer appetite is still present, with 32 different buyers acquiring UK targets so far this year and strong businesses continuing to attract interest from both domestic consolidators and overseas buyers.
The constraint is instead being driven from the supply side, with income and profits being squeezed at smaller brokers. The increase in disposal tax has also hit a valuable income stream, which has reduced the flow of potential targets on the market.
According to MarshBerry analysis, of the UK’s more than 3,500 intermediary firms, the smallest 3,000 would not collectively rank in the top five operators by total brokerage. The majority are lifestyle businesses with constrained growth trajectories, rendering them significantly less attractive to the sector’s leading consolidators.
Find out more about the factors that are driving the changing face of UK insurance M&A
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