Report sees more insurance deals this year – and more European insurers coming to the US

Deloitte says concern over policy undertakings of the Trump administration will affect consolidation sentiment

Report sees more insurance deals this year – and more European insurers coming to the US

Insurance News

By Allie Sanchez

Consulting firm Deloitte anticipates sustained merger and acquisitions activity throughout 2017, which is a continuation of the momentum seen in the US and Bermuda markets.

However, the firm said that several market realities are expected to affect the sentiment surrounding consolidation this year.

Deloitte said in a Royal Gazette report that companies are awaiting the moves that the Trump administration will make towards the tax reforms which the President committed to undertaking in his campaign.

“Deloitte also sees evidence suggesting a pick-up in activity of European insurers in the US in the latter part of 2017 and next year, due to ‘seemingly favourable trajectories for economic growth, taxes, regulation, and interest rates’,” the Royal Gazette reported.

“New merger activity in the Bermuda market in 2017 has been slow, possibly due in part to uncertainty around US tax reform and the relatively full valuations of Bermuda companies,” said John Johnston, Deloitte Bermuda partner.

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“It isn’t clear if the tax uncertainty will be resolved quickly or will get bogged down in the political process, but companies and their owners still need to deal with the underlying reality that the current pricing and investment climates remain unfavourable,” he added.

Furthermore, the company said that the short term uncertainty around the policy and regulatory plan of action of the new administration could cause a drag on M&A sentiment in the US market.

The question of whether demand from Asian buyers will remain as strong as in 2014 and 2015 is another factor that may affect consolidation activities this year, Deloitte said.

M&A value reached $27.6 billion in 2016, which is a sharp 61% drop on the $70 billion recorded from 2015. However, that sum was significantly bolstered by the $30 billion agreement between giants Ace and Chubb.

The total number of M&As for 2016 was 522, which was “roughly in line” with the 571 registered in 2015 the report added.


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