UK Law and Practice Contributed by: Clare Swirski, E. Drew Dutton, Hugo Laing and Rosamund Wood, Debevoise & Plimpton LLP
Recently, the PRA has expressed concern over potential concentration of risk, as well as life insur- ers’ exposure to correlated counterparties, particularly in funded reinsurance (FundedRe) arrangements. In PS13/24, the PRA set out a range of new expectations it had for life insurers entering FundedRe arrange- ments, particularly regarding cross-border arrange- ments or arrangements exposing life insurers to illiq- uid assets originated by funded reinsurers’ alternative asset managers. In September 2025, the PRA reiter- ated these concerns and its stance on FundedRe in a speech (see 12.1 Significant Legislative or Regula - tory Developments ) In the non-life sector, acquirers were interested in Lloyd’s businesses. Membership of Lloyd’s gives a presence in the global (re)insurance and specialty markets using Lloyd’s international licences and capital rating, thus avoiding the need for separate authorisations and individual capital requirements in each jurisdiction (see 12.1 Significant Legislative or Regulatory Developments ). Side-car structures saw continued momentum in 2025. Whilst life reinsurance sidecars continue to be established offshore, in the UK expansion is concen- trated in non-life and Lloyd’s sectors. London Bridge II, which creates a UK-domiciled, Solvency II-compli- ant structure for institutional capital to access diversi- fied insurance risk, continued to support the launch of innovative side-car-like insurance syndicates at Lloyd’s in 2025. Regulatory change and a challenging economic envi- ronment drove consolidation in the broker market. Specifically, the intermediaries market recently saw several joint venture and partnership arrangements, particularly with existing management of successful intermediaries, providing opportunities to engage with management to protect the critical value proposition. Interest continued from private equity (PE) firms and asset managers who sought to explore opportuni- ties across the full spectrum of the insurance market, including acquisitions of brokers. For instance, Bain Capital signed a definitive agreement on 1 September 2025 to acquire Jensten Group.
PE interest in specialty shares was evident in H1 2025, where just under a quarter of UK PE distribution deals involved MGAs or wholesalers (including Lloyd’s bro- kers), indicating selective deployment into specialty intermediaries despite lower overall volumes. The UK is Europe’s leading Insurtech market, and 2025 saw moderate acceleration in investment. Acqui- sitions by (re)insurers of insurtech firms may be further motivated by the shift in the insurance sector to digital platforms and innovations such as automation, data analytics and modelling, a trend that was accelerated by the COVID-19 pandemic (see 10. Insurtech ). Much M&A activity has continued to be driven by financial investors with plenty of capital and an interest across the full spectrum of the insurance sector. 5. Distribution 5.1 Distribution of Insurance and Reinsurance Products (Re)insurance distribution in the UK takes place through a wide variety of channels, including direct sales, brokers acting on behalf of their clients in arranging (re)insurance cover, agents acting on behalf of the (re)insurer, independent intermediaries and banks (through bancassurance or partnership arrangements). Distribution at Lloyd’s takes place through brokers and insurance agents or coverholders holding binding authorities on behalf of the managing agents/syndi- cates for whom they underwrite. Such intermediar- ies must be separately approved by Lloyd’s in addi- tion to receiving any other intermediary authorisation required in the jurisdictions where they operate. Regulation of distribution in the UK is based on the EU’s Insurance Distribution Directive (Directive 2016/97/EU) (IDD), replacing the Insurance Media- tion Directive (Directive 2002/92/EU) (IMD). The IDD aimed to improve intermediary regulation to cover all sellers of insurance, including insurers themselves, and ensure the same level of protection for consum- ers regardless of the distribution channel used. In the UK, intermediation by (re)insurers was already regu- lated and, therefore, fewer changes were required to
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