Last year’s private equity investments and broker consolidation caused hikes in aggregate brokerage across this year’s top 50 brokers – but will this be repeated in 2023?
Following a year of increasingly eye-watering inflation, big name insurance M&A deals and a political party unravelling, Insurance Times can now reveal the results of 2022’s Top 50 Brokers report, based on data supplied by financial consultancy Imas.
Despite the financial pressures engulfing many individuals and businesses, aggregate brokerage across the Top 50 Brokers constituents has improved 8% between 2021 and 2022, to £11.5bn, marking the highest level of aggregate brokerage growth in the last decade, according to Imas partner John Nisbet.
This suggests that brokers are in rude health and are flourishing post-pandemic – in part thanks to private equity (PE) backing observing and recognising the sector’s resilience while other industries struggled to stay afloat and operational during the pandemic years.
Movements at the top of the leaderboard remain static, with Marsh, Willis Towers Watson (WTW), The Ardonagh Group, Howden Group and Aon comfortably occupying the highest five spots – although Howden Group’s integration of personal lines broker A-Plan sees it pip Aon for fourth place in the ranking.
Next year, Howden Group could see a further acceleration up the Top 50 Brokers table as consolidator Aston Lark’s figures will no doubt be included within its next batch of financial results. Howden Group bought Aston Lark in October 2021.
Although this year’s report shows consistent results in the main, market-wide consolidation, new M&A approaches and lurking American broker backing all have the potential to cause changes ahead of 2023’s Top 50 Brokers report.
For example, M&A targets in the UK are fast dwindling following last year’s rampant spending spree by brokers – Imas predicted that by the end of this year, M&A deals between £5m and £25m will still only be around half of the 61 deals in this price bracket that were recorded in 2021.
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In turn, this means that PE may switch its focus to other types of UK-based businesses – where M&A pipelines are fuller – while brokers themselves are looking further afield to regions such as Europe to fulfil acquisition growth ambitions.
Another resultant impact could be the consolidation of the consolidators. Feedback from market commentators suggests that the likes of Marsh, Aon and WTW could snap up the current consolidators buying numerous smaller brokers. This would, of course, impact the top five ranking.
But, is Aon too scarred by its ripped apart WTW deal to attempt another consolidation of this ilk?
Brokers are showing no signs of slowing their growth – aggregate brokerage has the potential to reach yet another record high next year too.
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