Global M&A activity in insurance fell to 15-year low in 1H 2024
Activity in the global insurance M&A market in the first half of 2024, despite some growth compared to the previous year, is the lowest in 15 years. 103 M&A deals were concluded in the market of insurance services.
According to Clyde & Co, this follows a marked decline in deal volume during 2023 in response to a surge in inflation and lower interest rates. However, since then, a number of factors have led to a decline in deal activity worldwide.
In the first half of 2024, insurers that would traditionally have been active in the market were conserving capital and interest rates remained high. The slow pace has been fueled by high price expectations from vendors, combined with the increasing premium required to integrate technology systems as innovation widens the gap with legacy platforms.
In addition, the dynamics of M&A deals are also changing as there is a greater emphasis on attracting new talent.
“Insurance mergers and acquisitions during 2024 and into 2025 are likely to be driven by larger deals. Although the total number may not increase dramatically, we will increasingly see deals that span a number of jurisdictions with some of the major insurers now looking to acquire new portfolios or companies that span 8-10 countries,” commented Eva-Maria Barbosa, partner at Clyde & Co.
“The US election brings us closer to the end of a period of exceptional political change. Interest rates are mostly falling. While buyers are likely to become more optimistic, sellers may run out of resources. Companies that relied on financing will try to divest from non-core businesses or inefficient activities.”
By region, M&A activity in the UK market remained subdued during the first half of the year, but there is growing speculation that M&A activity will pick up across much of the capitalization spectrum.
While the factors that have slowed the acquisition of insurers around the world are also being felt in Europe. However, Clyde & Co said the impact of lower interest rates and greater political clarity, combined with the implementation of the EU mobility directive, could be a catalyst for increased multi-market M&A deals.
As for the US and Canada, both countries saw the most insurance underwriting deals of any region in 1H24, with 40 transactions closed, and Brookfield Reinsurance’s $3.587 billion acquisition of American Equity Investment Life, the largest deal of the year globally .
The US was the only region to see large sales in the billions of dollars.
Additionally, the five deals that were completed in the first half of the year continued a trend seen in the Middle East over the past five years, however local insurers are said to be expanding their regional presence to capitalize on growth and new opportunities throughout the region.
As for Asia-Pacific (APAC), the M&A market in the region was robust in 2024, Clyde & Co notes. Although deal activity has been declining year over year, the decline has been less pronounced than in the US or Europe.
Meanwhile, South Africa is also experiencing a global slowdown in M&A activity, with high inflation, high interest rates and lower economic growth as key factors.
Global players in South America continued to consolidate their positions in many geographies. Notably, this year HDI acquired Liberty Seguros in Chile, Colombia and Ecuador, following its takeover of Liberty’s Brazilian operations in late 2023.
In the field of property insurance, market dynamics also contribute to increased interest in special insurers. “Data and technology integration have become key factors for any insurance deal. Market conditions were mostly not conducive to significant deal activity, but they allowed high-performing companies to carefully plan their growth strategies,” insurers say.