Insurance Sees Highest Growth Rate for M&A in Ten Years

According to recent research by the international law firm Clyde & Co., mergers and acquisitions in the global insurance sector experienced their fastest growth rate in ten years in the regular first half of 2022.  

Globally, 242 deals were closed in that period, compared to 221 in the second half of 2021 and 197 at the same point last year. 

The number of deals in Europe decreased from 74 in the previous half-year to 67 in H1 2022 after experiencing considerable growth in H2 2021. The UK, France, the Netherlands, and Spain were the top four M&A-producing nations. 

The regular first half of 2021 saw a rebound in transaction activity in the Middle East and Africa, with 16 agreements reported, up from 12 in the second half of the previous year. Four acquirers in this half came from the Ivory Coast, three from South Africa, and two from Kenya, making up the majority of the continent’s acquirers. 

“Within the face of stark financial pressures – inflation, rising power prices, and looming recession – insurers stay centered on development alternatives,” said Eva-Maria Barbosa, a partner at Clyde & Co in Munich. “A number of components are driving deals. Rising rates of interest promise higher funding returns for long-duration companies, whereas serving to insurers to rebalance portfolios. Personal fairness corporations and asset managers are nonetheless eager to discover both entry into the insurance coverage market or growth of present footprints. And flagging insurtech valuations imply acquisitions are more and more enticing to PE traders and conventional carriers searching for to extend technological capabilities.” 

With 13 deals for more than $1 billion in H1 2022 compared to 14 in the second half of last year, the number of deals of this size remained largely stable. The sale of U.S.-based Athene Holding to Apollo Global Management for $7.7 billion represents the largest transaction of the year thus far. 

Another area where there has been a significant rise in transactions is the divestment of non-core assets by carriers focusing on core business, Clyde & Co said. 

Along with these challenges, companies must also deal with growing power costs, poor investment returns, supply chain issues, and the possibility of a recession. According to research, carriers also need to address growing ESG requirements and the risks that could result from not meeting them.