Insurance M&A In Europe At A Crossroads

Author:Mr Andrew Holderness
Profession:Clyde & Co

After a four-year slide, insurance deal-making in Europe saw an uptick in 2014 with 134 transactions completed, up from 114 in 2013, an 18% increase. Furthermore, 2015 has started with a bang in the M&A market. In addition to a couple of mega-deals involving US and Bermudan entities, more significantly from a European perspective, US insurer XL announced that it had sealed a deal to acquire UK-listed rival Catlin for GBP 2.79 billion, the largest-ever takeover of a Lloyd's underwriter to create the world's eighth largest group in the reinsurance industry. This may be a sign of more to come.

However, the insurance M&A market in Europe would appear to have arrived at a crossroads. There have been signs for some time that it has been coming back to life. The second half of 2013 saw a marginal pickup in activity, despite the market still being beset with a number of different uncertainties around issues such as regulation (e.g. the timing and form of Solvency II) and whether there was a likely improvement in the overall economic picture. In the first six month of 2014 some of this uncertainty evaporated as a number of key economies started to show signs of sustained recovery and the market gained considerable confidence and momentum.

Indeed, in the first half of 2014 Europe overtook the Americas for the first time as the world's leading region for deal-making. However, Europe's tenure at top spot proved to be short lived. In the second half of 2014 the volume of completed transactions dropped back, virtually back to 2013's historic low.

The largest deal in Europe was in Switzerland with the Helvetia acquiring compatriot Nationale Suisse for around USD 1.5 billion to a create a new insurance group with a leading position in the domestic market. In announcing the deal the chairmen of both companies alluded to the increased opportunities that the additional scale of the new...

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