The increasing strain of regulatory pressure across Europe’s ”fragmented markets” is forcing smaller firms to merge to remain sustainable, says market intelligence provider
European M&A activity is following a trend defined by insurers “broadening their footsteps” and diversifying operations beyond traditional lines of business into emerging sectors, continents and specialty areas.
That was according to Volker Kudszus, managing director and sector lead in insurance ratings at S&P Global Ratings, which said that “there are many of the large [insurers] still eyeing if there’s something [they] can do on the non-life side, [which is] more favourable than life currently”.
Kudszus made this claim during an S&P Global Market Intelligence webinar on 24 July 2025, entitled ‘Outlook and Trends for European Insurers – Second Half of 2025 and Beyond’, which examined key trends influencing mergers and acquisition activity in Europe.
Volker explains that this was especially interesting in comparison to US insurers, which “want to have a cleaner strategy” with “clean equity or credit story”. As a result, there are few composite insurers – those offering both life and non-life – in the US.
While larger insurers have diversified, there has also been greater M&A activity targeted at smaller firms, in response to increasingly complex regulations in Europe.
Since the start of 2025, Volker stressed that the EU’s introduction of new frameworks addressing cyber risk, insurance distribution and reporting requirements, which have imposed complex regulations that are unsustainable for many smaller firms.
As a result, Volker explains that small insurers have been merging to be able to fulfil those regulatory requirements.
He noted that in “fragmented markets like Germany”, which have hundreds of life and non-life insurers, many firms remain too small to be sustainable.
UK market target shift
This trend is also present in the UK insurance market with MarshBerry analysis revealing an acute lack of supply of mid-size acquisition targets.
Deal sizes continued a trend of decline in H1 2025, as they did in 2023 and 2024.
In the first quarter of 2025, MarshBerry revealed that, of the 35 deals announced, 69% involved targets valued below £5m, which is 10% less than all transactions since 2016. The decline indicates a clear shift toward smaller, lower-value acquisitions.
Read: Acquisitive brokers facing M&A supply shortages
Read: UK insurance distribution M&A has ‘slowest half year’ since H1 2019
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Volker explained that any notable developments in how European insurers are managing their investment portfolios as part of their capital structure are mostly announced by Axa as there is limited broader movement across the industry.
A similar trend to Europe has unravelled in the UK, where the pace of domestic broker M&A has slowed significantly.
According to MarshBerry, the pace of domestic consolidation in the UK was compressed, with sector deal volumes down 35% on the same point in 2024.
Meanwhile, the UK has also followed a similar path to Europe in favour of diversification, which has been triggered by a shortage of viable takeover targets for acquisitive insurance brokers, thereby forcing acquisitors to seek targets overseas.
Firms that have expanded their operations into Europe include Ardonough, PIB Group and the Clear Group. PIB Group, for example, completed its one hundreth acquisition with the purchase of French medical malpractice specialist BEA Group in November 2024.
Volker said: “The number of insurers is going down, but it’s more [seen in] the very small scale.
“On the large scale, [mergers are] rare cases [in which they will often] have efficiency gains. Overall, it’s not like the Wild West with any large transformational deals.”

With a range of freelance experience, Harriet has contributed to regional news coverage in London and Sheffield, as well as music and entertainment reporting across various publications.View full Profile
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