European insurance M&A could fuel rebound in deals

Mergers and acquisitions activity in the insurance industry globally declined in 2023 compared to 2022, with Europe gaining ground on the Americas, according to the latest edition of Clyde & Co.’s Insurance Growth Report issued February 26.

Despite Europe’s surge, the Americas still surpassed other regions in M&A activity, and will continue to be robust this year, according to Marc Voses, a New York-based partner at Clyde & Co., a global law firm that includes an insurance practice.

Marc Voses, partner in New York office of Clyde & Co.

“The robust M&A environment in the U.S. will continue as foreign investors continue to seek inroads into the U.S. market. This market is very attractive given the quality of the businesses operating in the U.S. and economic opportunities that exist for U.S. companies domestically and abroad,” Voses wrote in a response to questions. “Even though interest rates are currently unfavorable, many businesses have amassed cash reserves over the past few years in anticipation of a buying opportunity. I believe that we are on the cusp of such a buying opportunity that will serve to drive M&A activity.”

Global M&A declined from 449 deals in 2022 to 346 in 2023, according to the Clyde & Co. report. The gap between the Americas and Europe decreased from 109 deals in 2022 to 55 deals in 2023, with the Americas having 236 deals in 2022 and 162 in 2023, and Europe having 127 and 107 in those years respectively. Europe’s deals decreased by 15.7% but Americas deals declined by double that rate, at 31.4%.

The second half of 2023 saw a rebound from the first half, and Europe’s insurance M&A activity powered that more than the Americas, with a 22.9% increase from the first to second half, while the Americas increase was 5.1%.

That rebound, especially in Europe, according to Clyde & Co., means that 2024 could bring a rebound to insurance M&A activity levels prior to 2022.

“M&A activity is coming back to the European insurance market, as leading global carriers look to acquire specific business lines – particularly those high volume, but relatively low premium contracts that can be sold as embedded or affinity products,” said Eva-Maria Barbosa, partner in Clyde & Co.’s Munich office, in a press release about the report. “Companies finding it challenging to achieve healthy margins on commercial business are looking for reliable cash flow in the personal lines space.”