Insurance Industry M&A Activity Remains Resilient: Clyde & Co.

Global insurance industry M&A dipped slightly in the first half of 2021, but deals continue to be steady in key parts of the globe even in the face of the coronavirus pandemic, according to a new report from Clyde & Co.

There were 197 completed insurance industry M&A deals globally in H12021, compared to 201 in the same period a year ago, Deal activity grew by 7.3 percent in the Americas and 2 percent in Europe but dipped elsewhere, the report noted.

“Despite the challenges of the last 18 months, the insurance industry has responded well and demonstrated a remarkable degree of resilience when it comes to getting deals over the line,” Ivor Edwards, Partner and European Head of Clyde & Co.’s Corporate Insurance Group, said in prepared remarks.

He added that market realities are creating opportunities that should keep M&A deals continuing.

“Market hardening is creating organic growth opportunities for [insurance and reinsurance] carriers, but the availability of cheap liquidity, active interest from private equity investors and strategic re-underwriting of portfolios at larger carriers signal that an uptick in M&A is likely,” Edwards said. “The extent of that increase will vary by region and investor sentiment – deal makers in the U.S. are comparatively bullish whereas their counterparts in Asia-Pacific remain more cautious as they wait for a more positive economic outlook.”

Indeed, in the Asia-Pacific region, the number oi H1 deals dived 51 percent over the year before, the report noted. According to Clyde & Co., the region anticipated more robust M&A transactions in H1 but factors including “a continuing high regulatory bar” in certain jurisdictions” hampered this.

Additional deal statistics show the overall resilience of insurance industry M&A transactions:

• 11 deals in the 2021 first half were worth more than $1 billion, versus 15 in all of 2020.
• America’s acquirors dominated the 20 largest deals by value. Broken down, the U.S. had 9 of the top 20 deals, Bermuda had three, and Canada and the Cayman Islands had one each.
• Robust deal activity in the U.S. and Americas amounted to 116 of the total H1 deals, up from 102 a year ago – the highest M&A level since 2015.
• Europe’s 51 completed M&A deals were 1 higher than in H1 2020.
• Asia Pacific saw completed deals fall from 37 to 18 in H1 2021, driven by post-pandemic and geo-political uncertainty. In Africa and the Middle East, there were just 5 completed M&A industry deals in H1, down from 32 deals last year.
• The biggest M&A transaction in the 2021 first half was the sale of UK-based RSA to Regent Bidco for $9.2 billion.
• There were 35 completed cross-border M&A deals in the 2021 first half, the same as a year ago. Of the completed number of cross-border deals, 54.2 percent were inter-region.

The full study – Clyde & Co.’s Insurance Growth Report” mid-year update, is based on data by Thompson Reuters, Alacra and Refinitive for completed M&A transactions in the global insurance industry from 2009 through June 30 2021, covering both P/C and life insurers.

Source: Clyde & Co.