Canada’s insurance sector has quietly shifted from M&A target to global consolidator, even as North American insurance deal volumes softened in 2025 and investors poured more capital into other corners of financial services.
According to EY, both volumes and values in North American insurance M&A fell last year, reflecting a more cautious investor stance. Geopolitical instability, sticky inflation, high valuations and a pullback from private equity all weighed on deal appetite. Many carriers leaned into capital discipline, prioritizing share buybacks, organic growth and smaller bolt on acquisitions over big, transformational plays.
Insurance is still seen as a steady business, said Ron Stokes (pictured), financial services transaction leader at EY Canada. But, he warned, it’s also perceived as “somewhat constrained” right now. Deals are harder to get done, diligence is taking longer, and there’s less PE competition in many processes – which means less heat and less certainty.
That picture stands in contrast with the broader financial services M&A landscape. Globally, megadeals in banking and wealth/asset management drove a significant increase in overall financial services deal value in 2025. EY analysis shows megadeals accounted for the lion’s share of total financial services value worldwide, reflecting clearer scale synergies and more supportive regulatory dynamics in those subsectors.
“Banking attracted investors due to their stronger balance sheets and a softer US regulatory scrutiny, making banking consolidation more actionable and strategically compelling,” Stokes explained. “Whereas wealth/asset management remained appealing and despite lower deal values, volumes rose as firms sought scale, diversification, and digital capability investment, signalling investor belief in long-term growth potential,” he added.
Meanwhile, insurance transactions faced longer diligence timelines and fewer PE bidders, reducing competitive tension and deal certainty, making insurance transactions less attractive relative to other financial services subsectors. Yet within that more muted North American backdrop, Canada stands out.
The domestic insurance market recorded 34 disclosed deals in 2025, up from 29 the year before. More striking was the jump in disclosed deal value, which climbed to roughly US$4.6 billion from effectively zero in 2024. That step change, Stokes says, is less about a sudden explosion in activity and more about the size and nature of deals that came to market.
“The jump reflects a greater share of larger, publicly disclosed transactions, including brokerage/life activity and more outbound deals by Canadian buyers,” he says.
When asked “Why now?”, Stokes pointed to a mix of factors.
“Stronger premium growth in whole and universal life, solid macro resilience, and a 2025 market where megadeals led financial services value globally made buyers more willing to transact and disclose larger deals,” he said.
The outbound story is particularly notable. Canadian insurers completed 10 outbound deals in 2025, double the number in 2024, with a combined value of about US$10 billion. Over the same period, foreign acquisitions into Canada dipped from eight to six, with total inbound value of roughly US$0.4 billion.
“Canada is now a net acquirer in insurance M&A,” Stokes said. “In 2025, Canadian insurers made 10 outbound deals worth US$10bn and inbound deals were fewer and totaled US$0.4bn. This shift is due to strong financials, premium growth, and a stable economy which is encouraging international expansion.”
Fewer inbound deals, he stressed, should not be read as a sign of weakness in the domestic market. As Stokes put it, fewer inbound deals reflect high local valuations, regulatory complexities, and capital competition, not domestic weakness.
“Canadian insurers are becoming global consolidators, gaining international abilities, distribution, and product variety,” he said. Canada has shifted from being an M&A target to an acquirer, showing a structural trend toward outbound growth, he added.
Looking ahead, Stokes expects that structural trend to continue, supported by a gradually improving deal environment. “The Baseline expectation is that there will be modest acceleration in Canadian insurance M&A for 2026. This won’t be a boom but clearly stronger than 2025’s softened volumes,” he said.
A key swing factor will be the interest rate path. If cuts materialize as anticipated, mid market deal activity should lift meaningfully, Stokes added.
“Further, regulation and ESG will shape which assets come to market, while macro/geopolitics will determine how fast they transact,” he added.
