Private equity’s insurance love affair – can value outlast the deal?

Insurance is a business built on continuity.

Brokers rely on long-term client relationships, while MGAs depend on specialist underwriting expertise and established partnerships with insurers that provide capacity.

Private equity (PE), by contrast, invests with the expectation of generating a return and ultimately exiting its investment.

The two are not necessarily incompatible. PE investment can provide capital, technology and management expertise that smaller businesses might struggle to access independently.

But as consolidation reshapes UK insurance distribution, investors increasingly need to show they can create better businesses, not simply bigger ones.

The market is already showing signs of change.

MarshBerry data shows that 60 UK insurance distribution transactions had been announced by the end of September 2026, down 22% from 77 deals at the same stage in 2025.

Yet despite lower volumes, deal values have surged, with more than £3bn of transactions completed during the year and specialty businesses accounting for the overwhelming majority of deal value.

With the pool of attractive brokerage acquisitions becoming more limited, investors are increasingly looking towards specialist underwriting, international expansion and organic growth.

That shift raises a broader question. If acquisition-led growth is becoming harder to sustain, what does successful PE ownership actually look like?

Beyond buy and build

For Andrea Bertolini, partner and head of financial services at Inflexion, insurance broking has long appealed to PE because of its recurring commission revenue, resilient earnings and fragmented market.

“Buy and build cannot be a substitute for organic growth,” he said.

Bertolini argued acquisitions must be supported by operational improvements and sustainable growth if a group is to become more than the sum of its parts.

“If the underlying assets, businesses are not growing, from our perspective, [it’s] always been a ‘watch out’.”

John Nisbet, managing director at MarshBerry, believes the market has become more selective.

“The indiscriminate buy and build is over, it has to be a lot more thoughtful,” he said.

Consolidation has traditionally allowed investors to acquire businesses at one valuation and sell a larger group at a higher multiple. But this becomes more difficult as quality targets become scarcer and the pool of buyers for larger assets narrows.

Nisbet said investors increasingly want evidence of genuine operational progress rather than growth driven primarily through acquisitions.

“The whole sort of let’s pile it high and just sell it on story has sort of broken down,” he said.

Rizwan Rahman, partner in the corporate and M&A team at CMS, said prospective buyers are increasingly asking a more fundamental question:

“Will the consolidated business operate better?”

Acquiring a regulated business purely for scale can create costs and regulatory challenges if it does not fit within the wider group.

“You really have to focus on qualities because it is a regulated area and there are some pitfalls to just buying for the sake of buying,” Rahman said.

As opportunities for large-scale consolidation become scarcer, investors are increasingly judged on what happens after the deal closes.

The focus is shifting towards operational improvements, technology investment and specialist expertise capable of generating growth independent of further acquisitions.

The attraction of MGAs

As traditional broking becomes more consolidated, MGAs have emerged as increasingly attractive targets.

MarshBerry data shows specialty businesses accounted for just 28% of transaction volume in 2026 but more than 85% of total deal value, highlighting where investors increasingly see growth opportunities.

The trend is perhaps best illustrated by EQT’s reported $2bn acquisition of a majority stake in McGill and Partners from Warburg Pincus in September.

The transaction was one of several recent PE-backed deals involving specialty businesses and highlighted continuing investor appetite for underwriting-focused platforms even as retail brokerage consolidation slows.

Their appeal lies partly in the expertise they bring. MGAs allow insurers to access specialist underwriting knowledge and distribution without building those capabilities entirely in-house.

Smaller, focused businesses can also respond quickly to emerging risks and changing market conditions.

Rahman said this flexibility is particularly valuable in fast-moving areas such as cyber insurance, where specialist teams can adapt more quickly than larger organisations.

PE investment can help fund recruitment, technology and expansion, while a wider group can provide regulatory and operational support.

Yet MGAs also expose a potential tension within the investment model.

Their value often depends on underwriting discipline: knowing which risks to accept, at what price and on what terms. Growth achieved at the expense of profitability can undermine the business an investor intended to strengthen.

Nisbet believes this can create “question marks over the alignment between private equity and long-term sustainable underwriting performance” where the focus is on short-term earnings growth.

Tim Jones, director at independent MGA MPR Underwriting, said investment can support technology and recruitment, but growth should be driven by underwriting quality rather than treated as an objective in itself.

Jones said the greatest source of tension can emerge when investors’ growth ambitions exceed what an MGA has historically achieved through its existing model.

“Most tension will be in what’s the growth sort of ambitions between investment coming in versus what’s available and what the MGA has done previously and consistently,” he said.

That, he argued, is why growth should remain a consequence of strong underwriting rather than an objective driving it.

“Growth should follow sort of good underwriting, not sort of drive the underwriting.”

Whether PE ownership strengthens or weakens an MGA ultimately depends on the alignment between investor and business.

Investment can accelerate development, but if growth targets begin to outweigh underwriting discipline, broker relationships or capacity partnerships, the qualities that created value in the first place can come under pressure.

Who benefits from the deal?

The debate over value creation extends beyond investor returns.

Supporters of PE ownership argue that access to capital allows brokers and MGAs to invest in technology, compliance, governance and operational infrastructure that might otherwise be difficult to fund.

Rahman said smaller firms can benefit from management support, external advisers and technology investment alongside help navigating regulatory requirements.

“All of those benefits can actually grow the business for everyone, including the management and the people who work there,” he said.

Yet value creation in insurance is rarely measured by financial performance alone.

Relationships, specialist expertise and reputation remain fundamental to success, meaning the impact of PE ownership is often felt most clearly by staff, customers and business partners.

Bertolini argues that retaining talent and maintaining customer relationships are central to creating long-term value.

A business that loses key staff or struggles to retain clients may ultimately become less attractive to future investors, regardless of its scale.

However, Nisbet argued investors increasingly emphasise integration and culture, although he questioned whether those ambitions are always realised.

“You hear a lot of talk about culture. I mean, I’m a little bit cynical on that,” he said.

Jones also cautioned that a change in ownership could affect an MGA’s commercial arrangements, including relationships with capacity providers.

A new owner may seek to consolidate partnerships or renegotiate commission arrangements across a wider group.

Such changes are not inevitable, but they illustrate why the terms of an investment matter as much as the capital it brings.

Ultimately, the most important stakeholder may be the customer.

Supporters of PE investment argue that stronger systems, improved governance and greater scale can enhance service and resilience. Critics question whether pressure to deliver investment returns could, in some cases, conflict with longer-term priorities.

There is little evidence to that PE ownership, by itself, systematically improves or worsens customer outcomes. That makes it important to distinguish the promises made at deal stage from what can be demonstrated afterwards.

A different measure of success

Private equity is unlikely to disappear from insurance distribution.

Capital remains available, even as attractive brokerage targets become harder to find, while MGAs and international markets continue to offer alternative routes to growth.

But changing market conditions are putting greater pressure on investors to explain what happens between acquisition and exit.

As consolidation matures, the focus is increasingly shifting from scale to sustainability.

Nor should PE be treated as a single model. Investment horizons vary considerably, and not every firm is pursuing a short-term turnaround.

What matters is whether the investment strategy fits the business being acquired and whether the value created can endure beyond the next transaction.

A successful exit may demonstrate that a business has become more valuable. It does not, by itself, prove that it has become better.

The more meaningful test is whether the business can grow organically, retain expertise, maintain underwriting discipline and continue serving customers long after the deal is done.