Seeking new partners: Gallagher Re is firmly on the M&A trail

Gallagher Re is open to M&A opportunities, where there are strategic benefits to its existing proposition. That is one of the many priorities of Dirk Spenner, chief executive officer, International, at Gallagher Re since June 2024 when he took the reins from Tony Melia. Spenner joined Willis Re in 1996 and Gallagher Re in 2021 as part of the acquisition, initially running its EMEA business.

Key points:
Gallagher Re on M&A hunt
Market conditions favour cedants
New capital more strategic

“We are scaling up and there are other deals in the pipeline,” Spenner told Baden-Baden Today. “The wider Gallagher group is using M&A to support organic growth to achieve its growth targets and we are doing the same. There are fewer potential partners in reinsurance, compared with the insurance side, but we have a very clear strategy to pursue further M&A. We are open to speaking to interested parties.”

The reinsurance broker has already had a busy year on the M&A front. In May, it acquired Nongxin Insurance, marking a strategic move into China. And in September, it bought Steadfast Re, a move that strengthened its position in the Australia market as well as across the wider Asia-Pacific region.

On the Steadfast Re deal, Spenner said the move brings a lot to the table. “It gives us a lot more critical mass and an added firepower in Asia, particularly on the customised property side,” he said. “We're significantly scaling up our business in that region, to become a leading player. We want to be taking lead positions and become even more relevant to our clients.”

Clients can look at this renewal as something that’s exciting, which can provide them with a real opportunity.

Cedants’ time to shine

Outside his hunt for acquisition targets, Spenner is focused on clients. He believes the industry dynamic at the moment is one that can favour cedants. After some very tough years when rates hardened sharply in 2023/24, things are now changing. Insurers can eye better deals with their reinsurers – with the help of their broker – something also much needed in an increasingly volatile landscape.

“I think clients can look at this renewal as something that's exciting, which can provide them with a real opportunity,” he said. “Over the last couple of years, many have been forced to compromise on coverage: on the language, on breadth of cover and the price.

“That dynamic is changing now. I think there is an opportunity for reinsurers to offer a more desired outcome and more robust protection in the way they need it and in a way that solves their problems. So I look at the renewal season with excitement. The dynamic has shifted: reinsurers are competing, capacity has entered the market. That means opportunity for cedants.”

Part of this opportunity for cedants also comes on rate. He notes that there is much nuance around the word “softening” and what that really means. But he broadly agrees rates in many lines are falling.

“Based on the market dynamics we've seen in the first nine months of this year, many risks will trade at a discount to the current pricing. Certainly if your portfolio is steady, you're renewing a similar non-proportional reinsurance contract, and it’s loss free – you'll pay less than you did in 2025,” he said.

“That's just inevitable and will be true for the vast majority of lines of business and placements. Obviously, there’s some exceptions driven by individual loss experience or more systematic market disruptions. But if you look at the broad P/C business internationally that will be the reality over the next two months.”

Time to transact

The dynamic could also extend to types of products not seen in recent years, due to a limited availability of capacity post 2023. There has been talk in the market around aggregation covers. Spenner does not comment on that but does believe there will be much more negotiation and much more change in protections as a result.

“I think we will be seeing changes to structures, to coverage, language and new products coming to the marketplace. It won't be just a renewal where people just repeat existing placements and existing structures and just negotiate on price – it will be much more transactional. There will be a broader review of the protection needs of cedants, which is good news.”

Such choice, however, is only possible due to new capacity entering the market. That has and is happening – but in a different way to the aftermath of previous very hard markets when many new balance-sheet reinsurers launched in Bermuda, for example.

“What we see is a different type of investor this time around. They are operating a little more behind the scenes, through sidecars or other vehicles. They don't necessarily find themselves an office or can be found in the telephone book. As such, it’s a slightly different marketplace but a very vibrant one nonetheless. Investment into our industry is high that is just occurring in a less traditional way. It's a little bit more liquid: more tactical and strategic, empowering established brands. And that really makes a big difference.”

Against this backdrop, he believes the broker is more important than ever. “Whether it's a hard or soft market cycle, we provide to our clients with insights and analysis that helps them make better risk decisions. That’s not something we've just cooked up because the market started to soften, it's just the fundamental part of our offering.”

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