Insurance Market: 2025 Year in Review and the Outlook for 2026

The North American insurance market in 2025 was defined by contrasting M&A dynamics, a softening in overall deal volume alongside a continued stream of high-value strategic transactions, particularly in the specialty intermediary and brokerage sectors. We have concluded that, while total deal volume declined slightly, private equity-backed buyers and strategic acquirers remained active, building scale and expanding geographic reach through bolt-on acquisitions. We believe this environment continues to offer compelling opportunities — not only for investors seeking stable cash flows and recurring revenues, but also for independent agency owners considering their next chapter.

For sellers, the current market rewards well-run brokerages with strong client relationships, commercial-line focus, and operational discipline. Our experience in the sector enables us to navigate market nuances, uncover off-market deals, and assess the operational quality of firms with precision. Now is the time to act decisively in a sector where timing, structure, and execution make all the difference.

2025 began with a mixed backdrop for insurance M&A. The first quarter proved to be one of the weakest in years, reflecting broader economic uncertainty, rising costs, and strategic caution among buyers. Inflationary pressure, the onset of tariffs, and financing constraints reduced the number of buyers with sufficient capital and risk tolerance to pursue acquisitions, leading to a noticeable decline in overall transaction volumes.

However, this slowdown masked an important nuance: while deal count fell, deal quality and value remained resilient. Well-capitalized strategic acquirers and private equity-backed platforms continued to transact where acquisitions aligned clearly with long-term objectives. As noted in FOCUS Investment Banking’s overview of U.S. insurance M&A, insurance remains attractive relative to many sectors due to its recurring revenue characteristics and defensive qualities, even during periods of economic volatility. This dynamic helps explain why capital continued to flow into select transactions, despite broader market hesitation.

Profitability trends across the insurance sector further shaped M&A behaviour in 2025. Moderating rate environments in certain commercial lines, combined with elevated claims costs and catastrophe exposure, placed renewed emphasis on underwriting discipline and operational efficiency. Organic growth slowed for many firms, making acquisitions an increasingly important lever for expanding capabilities and maintaining margins.

As a result, acquirers prioritized businesses that could enhance earnings quality rather than simply add revenue. This reinforced demand for firms with stable cash flows, diversified client bases, and defensible market positions – particularly within specialty and commercial-focused segments.

Despite the overall reduction in transaction volume, 2025 featured a continuation of mega deals, many exceeding $1 billion in value. These transactions reflected a market where capital was concentrated among fewer buyers, however, this capital was deployed decisively when strategic alignment was strong.

While there was a significant reduction in the number of acquisitions, the value of the acquisitions maintained a high level, as evidenced in the table below.

As competition for quality assets intensified, buyers sharpened their criteria for acquisition targets. Firms with strong recurring revenue, high client retention, commercial and specialty focus, and clean financial reporting consistently outperformed peers in M&A outcomes.

According to FOCUS Investment Banking’s analysis of what makes an insurance brokerage attractive, acquirers place particular value on businesses with predictable revenue streams, strong carrier relationships, and operational readiness for integration. These attributes reduce execution risk and support premium valuations, a reality that became even more pronounced as buyers grew more cautious in 2025.

This dynamic further explains why many smaller or less differentiated firms found it more difficult to transact during the year, even as headline deals continued.

International insurers and global asset managers remained active participants in the North American market throughout 2025. Several high-profile transactions included foreign strategic buyers seeking exposure to the U.S. insurance market, particularly within specialty and commercial lines.

This cross-border activity reflected a broader trend toward geographic diversification and capital deployment into stable, cash-generative insurance assets, reinforcing the U.S. market’s continued global appeal.

Private equity-backed platforms continued to account for a significant share of total deal activity, particularly at the regional and specialty level. However, buyer behavior evolved over the course of the year. Rather than pursuing rapid expansion, many PE-backed firms focused on disciplined add-on acquisitions that strengthened existing platforms.

As shown below, a relatively small group of repeat acquirers accounted for a substantial portion of total deal activity through November 30, reflecting both consolidation and concentration in the market.

From the above list, we have recorded the geographic location of the publicly available acquisitions. Highlighted below are the states with the most, to least, publicly available transactions.

Several strategic themes consistently shaped the insurance market throughout 2025:

• Scale and distribution power
• Specialty and technical capabilities
• Portfolio optimization
• Cross-border dynamics
• Market caution and selectivity

Together, these forces defined a year where clarity of strategy mattered more than speed of execution.

A number of major European brokerages have expanded into the US market in 2025, the world’s largest insurance market.

• Legal & General Group – 4 US acquisitions
• Assicurazioni Generali – 1 US acquisition
• Munich Re – 1 US acquisition (through their subsidiary – ERGO Group)
• Howden Group – 1 US acquisition
• Willis Tower Watson – 2 US acquisitions

Looking ahead, the insurance market in 2026 is expected to continue along a path of selective consolidation rather than broad-based acceleration. Structural tailwinds, including recurring revenue models, specialty demand, and sustained interest from strategic and private capital, remain firmly in place.¹²³

However, buyers are expected to remain disciplined, favoring acquisitions that demonstrate operational readiness, earnings quality, and strategic fit. In this environment, quality, not quantity, will continue to define success in insurance M&A.

FOCUS has advised a number of financial brokers including the sale of Insight Insurance to Arachas, and the sale of OCI to Assured Partners. To discuss this article, and opportunities in the insurance industry, reach out to Eoin O’Keeffe or connect with our expert team to explore what’s possible for your business.