Report: US the most active region for insurance M&A in 2017

The US is the only region worldwide to report full-year growth last year

Report: US the most active region for insurance M&A in 2017

Insurance News

By Lyle Adriano

The latest version of Clyde & Co’s yearly Insurance Growth Report found that the US marketplace was the most active region for insurance M&A activity in 2017.

The report, entitled “Unlocking Opportunity in a Disrupted World,” noted that in the Americas, M&A activity increased 6.6% in 2017 – the only region worldwide to report full-year growth. In addition, the report revealed that 45% of the 20 largest deals in 2017 involved US acquirers.

While the Americas enjoyed full-year growth, it was the European region that saw the most improvement within the year. For the second half of 2017, deal activity in Europe increased 22.6% from the first half of the year; the Americas saw 4.6% growth in the same period.

In addition to listing last year’s results, Clyde & Co listed three key drivers of M&A activity to look out for in 2018:

  • Technology: Insurtech funding in 2017 surged 36% to $2.3 billion. The report noted that more insurers and reinsurers are investing in technology, as well as exploring partnerships with tech start-ups to improve efficiency and distribution. Notably, the number of insurtech investments made by insurers and reinsurers in 2017 grew by 14% to 120 – the highest annual total to date.
  • Tax reform: The Trump administration unveiled the Tax Cuts and Jobs Act in December 2017 – Clyde & Co sees the reform as a driver of M&A activity, particularly in Bermuda. In particular, the legislation includes a tax on premiums paid to non-US reinsurers, which has eliminated the distinct economic advantage Bermudan insurers and reinsurers previously had.
  • Territorial expansion: In 2017, 30% of M&A deals involved overseas transactions. Insurers and reinsurers, the report discovered, were interested in emerging markets such as China, India, Singapore, South Africa and the United Arab Emirates. On the other hand, Chinese and Japanese insurers have made large acquisitions and/or forged joint ventures with overseas insurers. Also, changing regulations among Asian countries that have limited new licenses make joint ventures and acquisitions more appealing to US and European insurance/reinsurance companies.

 

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