The UK insurance distribution sector saw just 41 announced M&A deals during the first half of the year, the slowest H1 since 2017, with activity now having been suppressed by supply and demand-side factors for around 18 months.
According to a new report from MarshBerry, H1 2026 came to a close with just four insurance distribution transactions in June, the lowest monthly total of the year so far and one fewer than June 2025.
Given the lack of seasonality in UK insurance distribution dealmaking volumes, MarshBerry notes that the year-to-date numbers suggest the sector will see fewer than 100 M&A transactions for a second successive year.
The report notes that an uptick in M&A may occur during the second half of the year if the new UK Prime Minister (almost certain to be Andy Burnham) were to further increase Capital Gains Tax (CGT).
Despite CGT having increased as recently as October 2024, Burnham and a number of his key allies have spoken in the past of their wish to align the tax more closely with income tax, meaning a further hike is highly possible, potentially even as soon as the Autumn Budget.
As noted in the report, CGT has previously been a catalyst for activity in the sector, as owners seek to secure exits prior to announcements on potential increases. If a further CGT hike was mooted for the Autumn Budget, then there could be a significant increase in vendor activity during September and October, spurred on by the prospect of a material difference in net sale proceeds.
Another emerging deal driver cited in the report are private equity exits - of the four deals that were announced in June, two involved PE exits. Across the whole of 2025, there were just five PE exits and MarshBerry forecasts that this figure is likely to be exceeded in 2026.
In 2026 so far, PE capital accounted for 41 per cent of all deals in the sector, falling below the long-term average. The majority of this activity comes in the form of bolt-on activity, undertaken by PE-backed broking consolidators like JMG Group and Clear.
MarshBerry also identified specialty businesses as an area of the sector seeing a growing portion of M&A, with more than a quarter of all insurance distribution deals in the year-to-date involving a specialty target, the highest level on record.
Analysing the increase in specialty acquisitions, the report states: “This reflects both a continuing appetite for specialty businesses from a wide range of buyers (strategic and financial), but also their increased prevalence.”
“New MGAs are being formed at a rapid rate and have been over a period of several years now. While sector consolidation has seen the number of commercial brokers decrease over the past decade, with new firms not being established and grown quickly enough to ‘replenish’ what is being bought, the more nascent MGA segment has continued to proliferate.”
MarshBerry adds that, combined with ongoing high levels of M&A in the Lloyds banking sector, the specialty segment is expected to continue to account for a significant and increasing share of all M&A in the sector.
Find out more about the factors that are changing the shape of M&A in the UK insurance sector
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