Insurance M&A: Private Equity Firms and Insurers Are Betting on Different Futures

Global M&A activity may be down, but activity in the insurance sector is up.

That’s something our research, “Insurance M&A: Resilience, Digital Disruption, & Value Creation” predicted in September 2024.

What’s striking isn’t just the volume of insurance sector deals—it’s the divergence in strategy between private equity buyers and strategic acquirers. Private equity firms and traditional insurers are approaching the market from opposite ends of the spectrum, driven by competing bets on what will define the next era of insurance.

Here’s what’s happening.

Private equity firms are leaning hard into digital disruption—like Munich Re’s $2.6 billion acquisition of Next Insurance—acquiring InsurTechs, funding early-stage platforms, and pursuing technology-driven operating models that could rewrite industry norms.

Insurers are staying the course—focused on strategic consolidation and core operational gains—like Gallagher purchasing rival insurance broker Woodruff Sawyer for $1.2 billion in March 2025. It’s a split-screen view of the future: one side building for speed and reinvention, the other for scale and resilience.

Our survey of 250 insurance and private equity executives uncovered a market in motion—and the winners will be those who not only choose the right strategy but execute it with precision.

Navigating New Risk Realities of Insurance M&A

Risk factors are also shaping deal dynamics. Macroeconomic uncertainty (50%) and heightened regulatory scrutiny (45%) are weighing heavily on decision-making. While ESG concerns remain a lower priority, insurance buyers are paying more attention to these factors than their private equity counterparts, with 56% of insurers expecting more scrutiny on ESG issues in upcoming deals.

Additionally, firms are increasingly recognizing the importance of due diligence rigor—particularly in technology investments, where unforeseen risks can derail integration efforts post-close. Those that can proactively mitigate these risks while remaining nimble in their execution will have a significant advantage in the competitive M&A environment.

Evolving Drivers in Insurance M&A Deals

The forces driving insurance M&A are evolving. While market consolidation and cost synergies remain priorities for insurers, PE firms are shifting toward tech-first strategies. The 2024 Marsh & McLennan acquisition of McGriff Insurance Services underscores this trend: a deliberate move by Marsh to expand its middle-market footprint and deepen its distribution capabilities. It’s a clear signal that insurers aren’t just consolidating—they’re sharpening their focus on scalable, margin-rich segments where digital tools can drive real efficiency. With heightened competition and rising valuations, buyers must be more strategic than ever in identifying value-creating opportunities.

Across the board, key deal drivers include:

• Strategic expansion: Insurers are consolidating market share (21%), while PE firms are expanding into new insurance product lines (11%).
• Cost and operational efficiencies: Business synergies (72% for insurers, 51% for PE firms) and operational improvements (58% for insurers, 53% for PE firms) remain key priorities.
• Return on capital: Both buyer types are looking to optimize capital deployment, but PE firms are also focusing on MGA/MGU platforms (11%) and digital transformation (26%) to accelerate returns. Carriers are following suit in select high-growth verticals: Travelers’ $435 million acquisition of Corvus Insurance—a cyber-focused MGA—signals growing interest in vertically integrated platforms that combine underwriting strength with advanced data and analytics. As MGAs continue to scale and diversify, they’re becoming more attractive targets for both traditional insurers and PE investors looking to unlock long-term value.

As M&A momentum builds, firms that align their strategies with these evolving priorities will gain a competitive edge. The next two years will be critical for buyers to refine their approach and execute deals that create sustainable value.

The difference in strategy also extends beyond the deal itself. PE firms are going all-in on technology post-acquisition – 82% are focused on enhanced technology and Insurtech capabilities, complemented by operational enhancements (53%) and business synergies (51%). Insurance companies are taking a more balanced approach, prioritizing business synergies (72%), operational enhancements (58%), and technology improvements (55%).

Integration Challenges and a Strategic Path Forward

Both insurers and PE firms face post-deal integration hurdles—but with different emphases. Insurers are focused on IT system integration (58%), cost synergy realization (53%), and revenue synergy achievement (51%). PE firms, meanwhile, share these challenges but add talent retention (46%) to their top concerns—an acknowledgment of the critical role human capital plays in executing their innovation-driven strategies.

In our experience, the race to consolidate at scale has often sidelined the execution of their portfolio strategies, particularly in private equity-backed brokerages. The high velocity of deals has created dislocation at the individual agency level—meaning many of these so-called consolidated portfolios are really 500 agencies continuing to operate independently—just with new targets set by the new owners. Rather than a truly unified strategy, it’s a fast-moving reshuffle with each agency sprinting in a new direction after being bought.

For insurance companies, this means striking the right balance between traditional consolidation and digital transformation. For PE firms, it means turning their bold technology bets into operational reality—while ensuring they retain the talent needed to drive innovation.

Authors: Peter McMurtrie, Trevor Jones, and David Crofts