Irish Insurance and Financial Services M&A review 2024

In this article, Stephen Quinlivan, partner and Eoin Shiel, senior associate from ALG's Financial Institutions M&A team look back on 2024 for the insurance and financial services M&A sector in Ireland (and elsewhere) and provide an outlook of likely trends and activity in 2025. 

The Irish M&A market showed continued resilience in the face of multiple economic and geopolitical headwinds in 2024, and the financial services M&A sector has formed an important part of that wider trend. The financial services sector continues to undergo significant structural change, with pronounced M&A activity evident in every subset of the industry in recent years, from insurance to banking and the wider non-bank sector.  An anticipated decline in interest rates and a secular trend towards consolidation of regulated market operators should see dealmaking continue apace as 2024 draws to a close.

High Profile Financial Services M&A deals for 2024

Insurance M&A

Consolidation of the broker sector in Ireland continued in 2024, with some of the bigger players continuing to build out their platforms with smaller bolt-on acquisitions in a 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. Targets are also often viewed as attractive for their asset-light businesses and consistent cashflow models, well-suited to ‘roll-up’ acquisition strategies. Increased scale benefits can additionally provide a competitive advantage to acquired brokers operating in a still fragmented and piecemeal Irish market. Demonstrating the continued strength of activity in this segment of the market, A&L Goodbody advised Zurich Insurance Europe on the disposal of its managing general agent Wrightway Underwriting to Pen Underwriting / AJ Gallagher, which completed in June 2024.

NFP Ireland (a member of the AON Group) have been particularly active in the Irish market in 2024 also, acquiring multiple small brokers around the country including HC Financial (in November), IHI Group (in October), Orca Financial Group (in August) and Sean Barrett Bloodstock Insurances Ltd (in July).

Irish insurance broker Arachas completed its largest acquisition in Ireland in 2024 at the start of December, acquiring Waterford's McDonald Dwyer Reddy & Byrne Insurances Limited (MDRB) for an undisclosed sum. The transaction followed Arachas’ continued expansion in Ireland, having made other acquisitions in Leitrim, Limerick and Tipperary earlier this year. Arachas is part of the UK’s Ardonagh Group, which is in turn back by UK private equity firm Madison Dearborn Partners.

This trend of consolidation is also apparent on a global basis, with AJ Gallagher announcing on 10 December 2024 its definitive agreement to acquire AssuredPartners (the partnership of leading independent insurance brokers) which was founded and backed by US private equity firm GTCR. This transaction will include the indirect acquisition by AJ Gallagher of a further three Irish insurance brokers, namely Gallivan Murphy Insurance Brokers, McKeever, O’Callaghan Insurances and O’Callaghan Insurances. Under the agreement, Gallagher will acquire the stock of AssuredPartners’ parent company for gross consideration of US$13.45bn, representing a significant EBITDA multiple. The transaction is subject to customary regulatory approvals and is expected to close during the first quarter of 2025.  A&L Goodbody is advising AJ Gallagher on the Irish elements of this transaction.

In the UK, it was announced on 6 December 2024 that Aviva will acquire Direct Line insurance group by way of public takeover, in a GBP£3.61bn cash-and-stock deal that will create the UK's largest home and motor insurer. The deal is subject to the approval of the shareholder of Direct Line, as well as customary regulatory and anti-trust approvals. This deal may well signal the commencement of a broader trend of increased strategic insurance M&A in the coming months.

In the health insurance market, Level Health, a new health insurance company backed by Aviva Ireland in a joint venture arrangement with management, launched in November 2024. Aviva Ireland will underwrite the company’s health insurance policies. This transaction underlines the continuing expansion of the Irish health insurance sector, following the sale by AIG / Corebridge of its Irish health insurance MGA Laya Healthcare to AXA in a deal worth €650m in 2023.

Financial Services sector restructuring

Insurance sector restructuring activity is also an increasing trend evident in recent years. In a process that completed in January of this year, ALG advised Zurich Insurance plc on its ground-breaking cross-border conversion into a German stock corporation under the Mobility Directive.  This transaction was the first outbound cross-border conversion of an Irish company and the first cross-border conversion of a regulated insurance company anywhere in Europe. It was also the first cross-border conversion application to come before the Irish courts.

The cross-border conversion process is likely to be a very popular tool for re-domiciliation of limited liability companies (both regulated and unregulated) within the EEA in the coming years. The Zurich conversion in particular is likely to be a landmark precedent for other financial services companies in Europe who wish to migrate their head office to another EEA jurisdiction by way of cross-border conversion.

A large-scale re-organisation project took place across Europe in 2024 with respect to the integration of Credit Suisse into UBS following the acquisition by UBS of Credit Suisse in a distressed sale of Credit Suisse to UBS in March 2023, a landmark deal brokered by the government of Switzerland and the Swiss Financial Market Supervisory Authority, and financially backed by the Swiss National Bank. A&L Goodbody advised UBS on the Irish elements of these mergers. 

Banking and non-bank sector

Consolidation and a continuing trend towards efficient asset management are also apparent in the commercial banking sector.  In May 2024, ALG advised Ulster Bank on its sale of a circa €400m portfolio of residential mortgages to Dilosk. The transaction integrates the portfolio into the existing ICS Mortgages business and underlines the continuing resilience of mortgage portfolio transfers as the wider banking and non-bank lender sector seeks to manage its portfolio and balance sheet structuring. With efficient capital management a core focus for lenders and portfolio servicers, together with a lower interest rate environment supporting prospective purchasers, we expect to see mortgage portfolio transfers continue to be a feature of the Irish financial services M&A landscape in 2025.

In an exciting development for the wider banking industry in Ireland, Monzo, the UK’s seventh largest bank, indicated in June of this year that it was in the early stages of establishing a presence in Dublin, which it described as a “gateway to European markets”.  Media reports suggest that Monzo has been engaging with the Central Bank of Ireland to secure a licence to operate in Ireland in recent months.

Outlook for 2025

We expect 2025 to be another busy year for financial M&A in Ireland. Recent signals from central banks around the world indicate that interest rates will continue to moderate in the coming year and this will hopefully drive increased M&A activity worldwide.

We expect broker consolidation to continue in the Irish market, with a number of high-profile sales processes expected to commence in 2025. As well as further sales of smaller independent brokers, we expect to see private equity owners of some of the larger platforms starting to explore potential exits.The recently announced sale of AssuredPartners to AJ Gallagher in the US is an indication of this trend commencing.

We expect to see continued interest in the Irish health insurance market, following the emerging wave of activity in that segment of the sector in recent years. 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 with respect to full (re)insurance companies (i.e. underwriters), and we will hopefully start to see a pick-up in this space in 2025. Ireland still has circa 190 fully authorised (re)insurance undertakings in Ireland, and so we expect to start to see some strategic sales again soon. The recently announced Aviva / Direct Line deal in the UK may well be a catalyst for further strategic processes in the coming months.

We also expect to see increased international re-organisations, consolidations and migrations of financial services players in 2025, in part driven by the implementation of the Mobility Directive across Europe just 18 months ago. This new legislation has provided an expanded tool set for international restructuring of financial services groups. The new cross-border conversion process in particular will allow financial services providers with limited liability to move across borders within the EEA and is likely to be a very popular mechanism in practice for migration projects. The new framework may also be an attractive option for financial services operators in the EEA to establish a presence in Ireland, by way of a merger with an existing player in the market.

We have also noticed a trend of banks seeking to integrate payment processors back within their credit institution authorisations for regulatory efficiency, so we expect to see a number of domestic and cross-border mergers in this space in 2025.

ALG’s Financial Services M&A team

A&L Goodbody has the largest dedicated Financial Institutions M&A Group offering in the Irish market, bringing together a group of highly skilled senior lawyers who collectively have decades of experience of advising on and executing complex and strategically important M&A and re-organisation projects for financial institutions across a range of sectors. We are consistently trusted by clients with lead counsel roles on disposals and acquisitions of regulated Irish financial institutions and business units. Our expertise includes traditional share sales and purchases, business transfers, court approved acquisition schemes and de-leveraging transactions. We are also the go-to Irish firm for complex re-organisation and migration projects for financial institutions, with a proven track record of pioneering and executing novel and award-winning structures.

Our Financial Institutions M&A Group leverages our firm's full-service offering and effectively collaborates with our market-leading financial regulation, anti-trust and other specialist lawyers whose invaluable knowledge and experience enables us to tackle the many complex issues that can arise on these transactions.

Financial services 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.

You can read more about our dedicated Financial Services M&A team and our relevant experience here.

For further in relation to this topic, please contact Stephen Quinlivan, partner, Eoin Shiel, senior associate or any member of ALG's Financial Institutions M&A team.

Date published: 13 December 2024