Demand for transactional risk insurance remained strong throughout 2023-24. Despite heightened geopolitical tensions, the UK M&A market has posted a steady recovery from its sluggish 2023, fuelled by growing economic certainty and investor confidence.
These trends are borne out in the success of Lockton’s UK transactional risks team, which placed policies for transactions with an aggregate value of £14bn in the last year, up from £13.2bn in the prior year. This masks a contradictory trend, however, with a 3% decrease in the average transaction value over the last 12 months. Taken within the context of a resurgence of M&A megadeals, such results indicate a growth in the utilisation of transactional risk insurances on the acquisition of SMEs, due to the near-unprecedented low ratings environment.
Notably, buy-side appointments continue to outweigh sell-side appointments for buy-side policies. This is a missed opportunity for the sell side: if the sell side were to appoint their broker, rather than leaving this as a decision for the buy side to make, this would likely give the sell-side greater leverage to shape the agreed policy terms, meaning they will ultimately reduce recourse to themselves.