Research from PwC has found a significant year on year increase in UK insurance M&A deals value during the first six months of 2013, despite a fall in deals volume. M&A deals value increased by over 350% to €1.5bn in the first half of 2013 from €344.6m in the first half of 2012, while number of deals fell by 34% from 32 in the first of half of 2012 to 21 in the first half of 2013.

The key driver of the increase in values despite a drop in volume comes from a small number of large transactions in the period. Insurance deals made up 58% of the total value of corporate financial services deals in the first half of 2013, arising from predominantly domestic deals.

Jonathan Howe, UK insurance leader, PwC, said: “The headline value of €1.5bn is a huge improvement on 2012’s figure of €344.6m, and although much of this significant increase is down to a small number of big deals in a thin market, it suggests that insurance deal activity in the UK has begun to grow again. From a Europe-wide perspective, it is encouraging that the period saw insurance deal values reach their highest level in two years.

"The London Market has generated a lot of M&A activity over the past year, and Lloyd’s vehicles continue to attract bids. High returns and genuine diversification provide further reasons for this deal appetite. The exposure of Lloyd’s vehicles is generally uncorrelated with other risks giving investors the diversification they are looking for, particularly in the current environment. This is combined with the fact that many Lloyd’s vehicles have generated high returns on investment in recent years, making the market very attractive.

“The prospects for the rest of 2013 look set to be bolstered by a more positive business environment. Lloyd’s vehicles look set to continue to attract bids from a range of potential buyers keen to enter the London Market. We would predict a rise in investors from other markets globally, as well as private equity investors."

Other findings from the report include:

•European insurance M&A deal value increased from €2bn in the first half of 2012 to €6bn in the first half of 2013. Deal volume fell from 75 in the first half of 2012 to 58 in first half of 2013.

•Total UK FS deals value of €3bn in the first half of 2013 compared with €4.1bn in the first half of 2012

•Total European FS deals value of €42.3bn in the first half of 2013 compared with €22.2bn in the first half of 2012

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