Global insurance M&A drops sharply in H1/23

Mergers and acquisitions in the global insurance industry fell sharply in the first half of this year, with just 171 completed deals worldwide (down from 207 in H2/22, and 242 at the same point last year) according to Clyde and Co’s Insurance Growth Report, released today.

The law firm's mid-year update shows that the drop-off in activity was most pronounced in the Americas, where there were 79 deals, down from 104 in H2/22, as M&A in the region fell to its lowest level since 2014.

The US was still the most active country worldwide with 60 completed transactions in H1/23, down from 83 in the previous six months. With 47 deals in the first half of 2023, activity in Europe was at its lowest level for more than a decade. The UK was the leading European country in terms of deals with 11 – ahead of France and Germany – but dropped to fourth place globally behind Canada and Japan.

Asia-Pacific saw completed M&A fall from 33 to 29 – but saw a spread of transactions across the region with Japan out in front with 14 deals, ahead of Australia, China, Hong Kong and South Korea, with three each.

The Middle East and Africa was the only region to see an increase in M&A in H1/23, with nine completed deals compared to eight in the previous six months.

Diminishing appetite in some regions for insurtech businesses was thought to have been one factor in the overall drop in activity. In Europe, finding capital for insurtech businesses is proving difficult due to continuing inflation and rising interest rates, while the US has been impacted by a lack of true insurtechs coming to market – rather than traditional carriers seeking new distribution channels.

However, interest in insurtech elsewhere, including from private equity remains strong, including in Latin America and Asia, particularly in countries with high levels of internet penetration, including Indonesia, Vietnam, the Philippines and Thailand, for a range of personal lines business.

Eva-Maria Barbosa, partner at Clyde and Co in Munich, said: “The lull in insurer M&A will be short-lived. Despite ongoing geopolitical and economic uncertainty, insurance businesses are adopting a ‘keep calm and carry on’ approach. Carriers are less dependent on bank financing for strategic transactions as they are restricted to leveraging a smaller proportion of the transaction anyway. With insurers typically balance sheet-heavy at present, the break in carrier M&A activity is likely to be over. Meanwhile, private equity capital is returning to the market for broker deals.”

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