Global Insurance M&A Rises To Highest Level For Four Years

Mergers and acquisitions (M&A) in the global insurance industry rose in the first half of 2019 with 222 completed deals worldwide, up from 196 in the second half of 2018, according to Clyde & Co's Insurance Growth Report mid-year update, released today. This marks the biggest increase in the volume of transactions since H1 2015 and the fourth consecutive six-month period of growth.

While the Americas was the most active region with 93 deals, up from 92, the biggest increase in activity was in Europe, which saw an 40% increase in M&A with 88 completed deals compared to 64 in the previous six months as companies move on from the diversion of Brexit preparations. France was the leading European country - and second most active worldwide behind the US - ahead of the UK and Spain. There were 38 deals in Asia Pacific marking the fourth consecutive period of rising deal volume to the highest level since 2015. Japanese acquirors were again the most active ahead of Australia and India.

Ivor Edwards, Partner and European Head of the Corporate Insurance Group at Clyde & Co, says: "Despite recent signs of market hardening, delivering a positive result for shareholders remains challenging and M&A is an attractive strategy to deliver growth for re/insurance businesses around the world. In Europe, now that the majority of re/insurers are Brexit-ready, they have been able to divert management attention back towards their growth ambitions. As a result, we have seen a surge in completed deals in 2019 that had been put on hold. Deal-makers elsewhere have been buoyed by a combination of strong economic growth, notably in the US, and positive growth prospects for the insurance sector, especially in Asia Pacific."

Key M&A drivers are shifting

Mega deals remain a feature of the market

There were 11 transactions valued in excess of USD 1 billion in H1 2019 compared to 18 in the whole of 2018, although there is a question mark over whether this trend can continue.

Edwards, continues: "The search for scale is still a key factor as leading players seek to deliver cost synergies in addition to new distribution channels and customers. However, there is a limited pool of targets at the top end of the market and it may become increasingly difficult for buyers and sellers to come to an agreement on valuation. We have seen a dip in large deal announcements and this will likely translate into fewer big-ticket transactions completing in the second half of the year."

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