Insurance Daily News

UK broker M&A stalls in October with only two deals

UK insurance distribution mergers and acquisitions slowed dramatically in October, with only two deals announced – the lowest monthly total in almost ten years, according to MarshBerry. This brings the year-to-date count to 62 transactions, 29% fewer than the 87 recorded at the same point last year, which was already considered a slow year.

The October slowdown defied expectations of a mini-spike ahead of the 28 October Budget, when owners were thought to rush to close deals before a possible rise in capital gains tax (CGT). The headline CGT rate remained unchanged and Treasury briefings removed the pressure to finalize deals before the Budget date.

The Budget did, however, cut the lifetime limit for Business Asset Disposal Relief from £1 million to £500,000 effective April 2027, a change MarshBerry estimates could add up to £70,000 in extra tax for qualifying sellers with shares worth £1 million or more. A new Founders’ Relief offering a 10% CGT rate also starts in April 2027, but its strict criteria mean it is unlikely to apply to many broker or MGA owners.

Both October transactions involved Lloyd’s brokers purchased by private-equity-backed UK commercial broking consolidators. Clear Group acquired Commercial Risks (UK) and its MGA, Troon Underwriting, while Seventeen Group bought Dashwood Brewer & Phipps. Specialty targets have featured in more than 30% of deals so far this year, the highest share on record, reflecting a shift toward businesses with stronger growth and margins despite higher renewal and concentration risks.

MarshBerry notes that commercial consolidators are attracted by diversification, international reach and placement synergies, while specialty firms are seeing modest staff growth driven by MGA start-ups and spin-outs. The trend toward specialty appears to be a long-term change rather than a temporary blip.

For broker owners, the removal of the pre-Budget deadline reduces immediate pressure, but the April 2027 cut to Business Asset Disposal Relief creates a new, earlier deadline. Sellers may need tax advice to decide whether completing a transaction before that date is advantageous. Independent Lloyd’s brokers face a market where steady purchases by consolidators are reducing the number of standalone firms, potentially increasing the value of those that remain.

Why it matters

The slowdown and tax changes reshape timing and valuation considerations for UK insurance brokers contemplating a sale.

FAQ

How many insurance distribution deals were announced in the UK in October?
Only two deals were announced in October.

What is the new lifetime limit for Business Asset Disposal Relief?
The limit was cut from £1 million to £500,000 effective April 2027.

Which two Lloyd’s brokers were acquired in October?
Clear Group bought Commercial Risks (UK) and Troon Underwriting, and Seventeen Group bought Dashwood Brewer & Phipps.

What percentage of deals this year involved a specialty target?
More than 30% of deals so far this year have involved a specialty target.

Source: Insurance Business UK. See the original source for full details.