BMS releases latest M&A report

Independent specialist insurance and reinsurance broker BMS has released the latest edition of its Private Equity, M&A and Tax (PEMAT) report. The report analyzes trends from 2022 and provides an outlook for 2023 for the North American, European and Asian M&A markets.

The M&A environment has felt the impacts of macro developments including the COVID-19 pandemic, the Ukraine war, concerns about recession, higher interest rates, and risks associated with the recent banking crisis, the report found.

Despite these challenges, private equity and corporates continue to find M&A opportunities, according to the report. While deal volumes have fallen from the high levels seen in 2021 and early 2022, BMS remained optimistic that M&A would see a resurgence toward the latter half of 2023.

Key findings of the report included:

• Despite a challenging macroeconomic environment, the M&A insurance market in 2022 nearly matched the record-breaking deal volume of the previous year
• Growth appetite remains in the M&A insurance market, with BMS seeing approximately 40% growth in insurance products purchased over the past 24 months
• Deal size last year was impacted by the slowdown in M&A activity combined with a rise in interest rate, with insurers noting a reduction in average enterprise value as investors became less able to commit to high deal multiples
• A significant rise in claims from policies underwritten during the pre-2022 M&A boom has resulted in reinsurers buckling down on managing risk, spurring lower primary policy limits and an increase in excess policies as a proportion of insurers’ books
• There was no notable rise in distressed M&A targets, with the short-term macroeconomic impact of the COVID-19 pandemic largely ending in 2022. However, potential global recession this year is expected to spur an increase in the number of distressed sales
• Renewables and infrastructure sectors saw an 8.7% increase in deal volume in 2022 compared to the prior year
• While European M&A activity tapered off in the second half of 2022, the tax insurance market posted a record number of inquiries
• Secondaries remained active last year, with total transaction volume surpassing $100 billion for the second year running

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“We are delighted to bring you the latest edition of the PEMAR report,” said Tan Pawar, head of private equity and M&A at BMS. “2023 has gotten off to a subdued start compared to the deal activity levels seen over the past two years. However, momentum is growing, and we have not seen a decrease in inquiries from companies eager to obtain M&A insurance. With market conditions expected to stabilize, we should see a resurgence in deal activity by the end of Q2 and into the second half of 2023.

BMS recently announced the strengthening of its energy lines team with three new hires and the appointment of two industry veterans to its cargo team.

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