US Insurance M&A Sees Shift to Megadeals Amid Broader Market Consolidation

PwC's US Deals 2025 Midyear Outlook highlights a shift in the U.S. insurance mergers and acquisitions (M&A) landscape, marked by a decrease in overall deal volume but a notable increase in large-scale "megadeals." This trend is characterized as the "consolidation of consolidators," where major public insurance brokers are acquiring substantial private equity-backed assets, supported by favorable interest rates and financing conditions.

The brokerage sector remains attractive, with strategic buyers and private equity firms pursuing growth through sizable acquisitions rather than smaller deals. The current market has led brokers to prioritize operational efficiency and cost management, reducing smaller acquisition activity due to leverage concerns and higher borrowing costs. Concurrently, insurers are reassessing their portfolios, selectively divesting non-core or subscale operations to optimize shareholder returns amid an environment of elevated property and casualty (P&C) profitability fueled by increased rates and inflation adjustments. PwC reports heightened investor interest across the P&C space, alongside sustained momentum in broker and managing general agent (MGA) transactions.

Additionally, life and annuity sectors see evolving deal structures involving alternative capital rather than traditional buyouts. Looking ahead, PwC anticipates an acceleration of broker M&A activity, driven by competitive pressures and market positioning needs, alongside a resurgence in initial public offerings (IPOs) once conditions stabilize. The brokerage market's heightened consolidation and strategic repositioning indicate forthcoming robust deal-making, reflecting a dynamic U.S. insurance sector adapting to changing economic and capital market conditions.