Insurance sector quadruples M&A activity to $195B last year: Report

The insurance sector whipped out more deals than ever in 2015, with 24 transactions valued at $1 billion or more, according to a Conning & Co. study

Insurance News

By Lyle Adriano

The volume of merger and acquisition (M&A) activity in the insurance industry has more than quadrupled from 2014 to 2015—from $43.8 billion to $194.9 billion, according to a study from investment management firm Conning & Co.

And it’s by no means over. Researchers expect additional activity is to be expected, especially in the property and casualty sector.

“Key themes in the year included the desirability of specialty and Lloyd's targets, large acquisitions by Japanese and Chinese buyers, reinsurance consolidation, and combinations in sectors facing strong external challenges, such as crop insurance and medical professional liability,” the study stated in summary of its findings.

Compared to the nine transactions valued at $1 billion or more in 2014, the study noted that 2015 saw 24 such transactions in the property/casualty, life and health sectors. The study also pointed out that most of the M&A activities were arranged by strategic rather than financial buyers.
While the volume of transactions increased between 2014 and 2015, the actual number of transactions remained virtually unchanged at 183.

The aggregate value of M&A deals increased from 2014’s $6.7 billion to 2015’s $39.6 billion among property/casualty insurers, the study found. This increase was due in part by a number of large transactions, such as Ace Ltd. and Chubb Corp.’s deal in October.

The report expects more merger and acquisition activity down the line.

“The recurring themes of consolidation, product and geographic diversification suggest that more insurers will seek partners to keep up with large competitors,” a part of the report read.

The health and insurance sector’s $100.8 billion of aggregate transaction volume for 2015 accounted for more than half of the year’s $195 billion in global activity. In comparison, the sector’s volume hit only $33 million in 2014. The number of transactions in the health and insurance sector also increased, from 13 in 2014 to 22 in 2015.

In summary, the report foresees more M&A activity among “second tier-players” for 2016 after the larger insurers took stage last year.

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