A large majority of insurers plan to pursue acquisitions or divestitures through 2017, according to a new KPMG report, indicating that late-2015 and 2016 deal-making wasn’t a fluke.
About 84 percent of insurers will target one to three acquisitions in 2017, the report noted. In addition, 94 percent said they’d pursue at least one divestiture through the year. KPMG said these results suggest a broader environment for deal-making.
“Insurers are clearly hungry for good M&A opportunities,” according to the KPMG report. “And the majority reported that they expect to undertake domestic acquisitions over the coming year. A significant number also seem keen to use the current environment to expand their foreign operations and footprint.”
Insurers are making these decisions in the wake of the Brexit vote in June 2016 and the election of U.S. President Donald Trump, which are both widely expected to affect the global business and investment climate, KPMG said.
KPMG noted that two-thirds of insurers said they will pursue a cross-border acquisition of some kind, something that the consulting firm said is noteworthy considering “55 percent of our respondents currently operate in five markets or less.” The prediction: at least some insurers will be looking at acquisitions in regions and markets that are new to them.
Also worth noting: KPMG said that the U.S. continues to be the top national market where insurers expect the most deal activity. According to KPMG, nearly 25 percent ranked the U.S. as their top national destination. The second top national target market was Greater China, which 12 percent of insurers said was their top national basis.
Other highlights from the KPMG survey:
KPMG’s data is based on a 2016 fourth-quarter survey of 200 global insurance executives about their perspectives and M&A outlook over the coming 12 months. About 33 percent came, equally, from the Americas, Asia-Pacific and Europe, Middle East & Africa. Responses by segment: 25 percent from life insurers; 25 percent from non-life insurers; 25 percent from reinsurance; and 25 percent from “other,” which translates to insurance brokers and services. Minimum annual revenue for participating companies was $1.5 billion.
The report is: “The New Deal: Driving insurance transformation with strategy-aligned M&A.”