Insurance mergers and acquisitions worldwide are slowing down, but deal volume in the Americas is still up for the time being, due to insurtech and other factors.
Globally, insurance mergers and acquisitions appear to be slowing down in the second half of 2017, but deal volume remains up in the Americas – at least for now.
Clyde & Co's Insurance Growth Report mid-year update shows that worldwide M&A in the insurance industry has hit a two-year low, falling to 170 deals in the first half of this year from 186 in the preceding six months. Activity was up, however, in the Americas, where insurers completed 86 transactions in the first half vs. 81 in the second half of 2016.
"Although deal activity in the US insurance sector was high during the first half of this year, it may not be as robust during the second half of the year, despite earlier high expectations," cautioned Vikram Sidhu, a Clyde & Co partner in New York who specializes in insurance transactional and regulatory matters.
Sidhu explained that several factors are tempering M&A growth. These include "lesser clarity about what President Trump's administration and the Republican Congress might be able to achieve with respect to issues such as tax reform as well as global uncertainty on issues ranging from the effects of Brexit to North Korea," he said.
Insurers continue to search for growth and to generate value, and M&A has served both of those needs historically. A continuing area of investment for insurers is insurtech, Sidhu noted. "The insurance industry's focus on and interest in insurtech continues unabated – whether it is the development of insurtech organically within insurance companies and groups or through investments and acquisitions – because the industry recognizes that the marriage of insurance and technology promises to bring about dramatic changes in the near future to almost every aspect of the insurance business," he said.
The Clyde & Co Insurance Growth Report is based on data by Thomson Reuters and Alacra for completed mergers and acquisitions in the global insurance industry in the period 2009 through the end of June 2017.
Americas remain bright spot for insurance M&A
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