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The Actuary The magazine of the Institute & Faculty of Actuaries

First insurance M&A increase recorded since 2015

There was a rise in the number of mergers and acquisitions (M&A) completed across the global insurance sector in the second half of last year – the first increase recorded since 2015.

Rise in M&A activity ©Shutterstock
Rise in M&A activity ©Shutterstock

That is according to an annual report from law firm Clyde & Co, which reveals the US was the most active region, completing 80 deals in the first half of 2017, and 96 in the final six months.

"Following on from the uptick at the end of last year, deal making has already got off to a quick start in 2018,” Clyde & Co global head of corporate insurance, Andrew Holderness, said.

“After a lacklustre couple of years for transactions, this rise in activity indicates a renewed level of confidence in deal-making as a tried-and-tested route to growth.”

Despite the increase in M&A recorded in the second half of 2017, the total number of deals completed throughout the whole year fell from 387 in 2016 to 350.

US acquirers accounted for 45% of the top 20 deals, while the number of European transactions fell from 151 to 118 amid Brexit uncertainty.

In Asia the volume of deals completed fell 42% from 72 to 42, with the Chinese government’s plans to reduce investment limits for foreign insurers thought to be hampering activity.

Legislative changes saw interest in emerging markets continue to grow, with further changes expected to boost activity in India and South Africa later this year.

However, one of the key findings of 2017 was the 120 private technology investments made by reinsurers over the year, with worldwide InsurTech funding increasing by 36%.

Looking ahead, Clyde & Co expect established technology companies such as Google and Amazon to take advantage of the insurance market in 2018, building brand loyalty and relegating established insurance players.

“The use of big data is allowing powerful and innovative technology companies to enter the insurance market, using their existing platforms as powerful distribution and analytics tools,” Clyde & Co partner, Kevin Martin, said.

“This has the potential to turn the traditional insurance industry on its head for personal lines business.”

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