US brokers view UK as ‘most logical launching point’ for expansion

Many US insurance brokers are looking to establish a presence in London as it is the “Wall Street of insurance”.

That was according to John Wepler, chairman and chief executive of mergers and acquisitions (M&A) at advisory firm MarshBerry, who said firms across the pond viewed the UK as the “most logical launching point” when rolling out plans to grow internationally.

Wepler made the comments after his firm acquired UK-based Imas as part of its plans to expand across Europe.

While MarshBerry has offices in the Netherlands, France and Germany, Wepler said expanding to the UK “fills a geographic hole” that complemented its existing presence in Europe.

He added that there were more than a dozen US insurance distributors that could follow suit after scaling their business over the last few years.

“There are roughly 20 insurance distributors in the US that are over $1bn in revenue, the majority of which do not have a presence in Europe,” Wepler told Insurance Times.

“That is generally the threshold when a US broker starts to look for an international presence and the UK is often the most logical launching point.

“Many without a UK presence are rolling out plans to establish a European beachhead in London, as it is the Wall Street of insurance.”

Why the interest?

Part of this increased interest has been driven by currency, as the dollar strengthened in comparison to the pound.

When the government announced its mini budget in September 2022, the pound’s value fell significantly against the dollar – at its lowest, sterling fell close to $1.03 as markets reacted to tax cut proposals.

While the pound has regained strength, Deloitte highlighted in its 2023 Insurance M&A outlook report that US firms would be interested in the UK.

The report, which was published in November 2022, said that “the availability of capital among overseas carriers and investors – and relative strength of the dollar for US companies in particular – will attract buyers eager to take advantage of UK currency weakness”.

One example of a US broker expanding into the UK is Brown and Brown, which acquired Global Risk Partners – now known as Brown and Brown Europe – in July 2022.

Stephen Ross, head of M&A at the newly rebranded firm, told Insurance Times earlier this year (13 April 2023) that there were US-consolidated businesses within the UK already who were making acquisitions of their own.

“So, a number are already here and there may well be others that wish to come into the marketplace,” he added.