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Irish Insurance M&A review 2023

Irish Insurance M&A review 2023

In this inaugural annual article Stephen Quinlivan, Partner and Eoin Shiel, Senior Associate of A&L Goodbody LLP look back on what has been a busy 2023 for insurance sector M&A in Ireland and provide an outlook of likely trends and activity in 2024.

Mon 18 Dec 2023

While overall 2023 has seen a global slowdown in M&A, insurance sector M&A has bucked the trend somewhat. The insurance sector in Ireland continues to undergo significant structural change, with pronounced M&A activity at every level of the industry in recent years. From insurance broker consolidation, the emergence of private equity as a core driver of deals, and large-scale transactions involving established industry names at the top end of the market, the scale of transactional activity indicates wider-scale shifts in the industry landscape.

The Irish insurance sector is diverse and varied and includes insurance companies (i.e. underwriters), managing general agents (MGAs), brokers, reinsurers, captive insurers and reinsurers, insurance service providers and ‘insurtech’ firms. This year has seen prevailing levels of M&A activity right across the sector and we expect this to continue into 2024.

High profile insurance M&A deals for 2023

A&L Goodbody advised AIG / Corebridge on the disposal of its Irish health insurance MGA Laya Healthcare to AXA in a deal worth €650m, the largest wholly Irish insurance M&A transaction this year. Laya is a major player in the Irish health insurance market and holds a circa. 28% market share, generating €800m in premiums from close to 700,000 customers in Ireland. The health insurance business is currently underwritten by Swiss Re subsidiary Elips, but it is expected that AXA will assume underwriting responsibility in the near future. The deal signed in early August and completed at the end of October, following merger control clearance from the CCPC.

In what was the highest value private insurance M&A deal in European history, A&L Goodbody advised Liberty Mutual on the Irish aspects of is agreed sale of its Western European general insurance business, Liberty Seguros, to Generali in a deal worth €2.3bn. The transaction perimeter includes Liberty Seguros’ general insurance operations in Ireland, Northern Ireland, Portugal, and Spain. The deal signed in June and remains subject to regulatory approvals.

A&L Goodbody also advised RiverStone International, the largest provider of legacy solutions in the Lloyd’s market, on an agreement to acquire non-life run off platform Catalina Insurance Ireland. Catalina Insurance Ireland has two main portfolios: a German med-mal book and a UK motor portfolio. The deal signed in September and it still subject to regulatory approval.

Ongoing insurance broker consolidation

Consolidation of the broker sector in Ireland continued at pace in 2023, with some of the bigger players continuing to build out their platforms with smaller bolt-on acquisitions and sellers cashing in on very healthy EBITDA multiples given the competitive buyside environment.

Much of the consolidation in this space in recent years has been driven by private equity backed buyers, who see insurance brokers as a good short to medium term investment to which they can add value before selling on, with targets often being viewed as attractive for their asset-light businesses and consistent cashflow models, well suited to ‘roll-up’ acquisition strategies. Increased scale benefits also provide a competitive advantage to acquired brokers operating in a still fragmented and piecemeal Irish market.

Following its entry to the Irish market in 2021 through its acquisition of Innovu Insurance, A&L Goodbody advised Arthur J Gallagher on its acquisition of Dublin 8-based broker First Ireland Risk Management in January 2023. This acquisition almost doubled Gallagher’s gross written premiums in Ireland from €70m to €140m, making it one of the top five biggest brokerage groups operating in the country. Gallagher expanded its Irish broker operations further in November 2023, through the acquisition of Keaney Insurance Brokers in Dublin.

The Clear Group were another new entrant to the Irish broker market this year, through the acquisition of Munster-based commercial broker MBC Insurance in April. In July 2023, the Clear Group announced its further purchase of a 50% shareholding in Thomond Underwriting Limited, a commercial MGA and Lloyd’s coverholder based in Ireland and Northern Ireland.

UK insurance broker PIB continued its rapid expansion in Ireland in this year with a standout 9 acquisitions. PIB’s platform in Ireland is Campion Insurance and its acquisitions this year included Landmark Insurance, Halligan Insurance, Ennis-based brokerages Gleeson Insurance and Munster Group Insurance and Limerick based Tim Duggan Insurances.

British broking group Aston Lark also continued its spree of acquisitions in Ireland by announcing a deal to take over Dublin-based mortgage broker Finance Solutions in August. This company was then folded into Aston Lark Ireland which has since been rebranded as Howden Insurance Ireland.

Rounding out the sector, AssuredPartners acquired Clare-based O'Donovan Insurance and Kerry based Sayers Insurances in the first half of 2023.

Insurtech / Insurance services

2023 has also seen some notable M&A activity with respect to insurance service providers and insurtech. Ireland is quickly gaining a reputation as a home to a burgeoning insurtech sector, with over 100 such firms operating in Ireland. Many of these firms are early-stage start-ups, but we do expect to see increased M&A activity in Irish insurtech in the coming years as investors in more mature insurtech firms begin to consider exit strategies.

A&L Goodbody (alongside Clifford Chance in London) advised boltech, the fast-growing international insurtech on the acquisition of Irish insurtech company Digital Care, which operates a leading embedded protection company based out of Poland. The deal completed in October 2023.

On the service provider side, New-York based insurance broker NFP added Irish health and safety consultancy firm SeaChange Limited to its existing Irish platform in November. This deal will see NFP, one of the largest brokers in the US, expand its offering of health and safety solutions for clients in Ireland, the UK and mainland Europe.

Arthur J Gallagher also acquired Allied Risk Management, the Ireland based provider of insurance, reinsurance & actuarial services from CBL Corp back May.

Outlook for 2024

We expect 2024 to be another busy year for insurance M&A in Ireland. Recent signals from central banks around the world that interest rates have peaked and will likely be cut in the coming year will likely drive increased M&A activity worldwide.

We expect broker consolidation to continue in the Irish market, with a number of high-profile sales processes due to commence in January. As well as further sales of smaller independent brokers, we expect to see private equity owners of some of the larger platform starting to explore potential exits.

We expect to see continued interest in the Irish health insurance market, which at present only has three market participants. Owners of some of Ireland’s more mature insurtech start-ups may also start to consider exit strategies.

There has been relatively limited M&A activity in the past five years in Ireland in relation to full (re)insurance companies (i.e. underwriters), and we will hopefully start to see a pick-up in this space in 2024. Ireland still has circa. 190 fully authorised (re)insurance undertakings in Ireland, and so we expect to start to see some strategic sales again in the near future now that the dust has settled following Covid-19 lockdowns.

We also expect to see increased international re-organisations, consolidations and migrations of (re)insurance companies in 2024, in part driven by the implementation of the Mobility Directive across Europe in 2023. This new legislation has provided an expanded tool set for international restructuring of (re)insurance groups. The new cross-border conversion process in particular will allow (re)insurance companies with limited liability to move across borders within the EEA, and is likely to be a very popular mechanism in practice for migration projects.

Dedicated A&L Goodbody Insurance M&A team

A&L Goodbody is the only firm in the Irish market with a dedicated insurance M&A team and we are consistently on the front line of virtually all high profile and complex insurance M&A deals in Ireland. Our market leading Insurance & Reinsurance and Corporate and M&A teams (as well as other specialist departments) work together seamlessly to deliver on these mandates.

Insurance M&A transactions have become increasingly more complex in recent years, requiring specialist legal teams who can navigate the multitude of regulatory and other issues that can arise. In particular, we see increased regulatory scrutiny of these transactions during change in control approval processes. Given our extensive experience of working on these transactions in recent years, we are uniquely placed to guide and support clients through these transactions. We can foresee many of the complex issues that will arise, and, as a result, can offer focused solutions in an effective and cost-efficient manner.

For more information please contact Stephen Quinlivan, Partner, Eoin Shiel , Senior Associate or read more about our dedicated Insurance M&A team and our relevant experience here.

Date published: 18 December 2023