The number of completed merger and acquisition deals in the insurance sector last year leaped from 407 to 418, according to Clyde & Co’s latest Insurance Growth Report.
The report said that the surge was driven by a particularly strong second half of the year, which saw 221 deals, up from 197 in the first six months.
The Americas remained the most active region for M&A – accounting for over half of the global annual total – with 224 deals, an annual increase of 17%. Activity was led by the US, where the number of completed transactions reached 180 for the year – the highest total for the country since 2015. Deal activity in Europe was up 21% year-on-year, buoyed by a stand-out second half, which saw 74 transactions, up from 51 in H1 2021.
Following a relatively buoyant two years, Asia Pacific saw a 44% drop in activity from 75 deals in 2020 down to 42 in 2021. The Middle East & Africa also experienced a similar trend, with the 2021 total of 17 deals representing a 47% decrease on 2020, which was a bumper year for the region with 32 transactions.
Ivor Edwards, head of the European corporate insurance group at Clyde & Co’s, said: “As anticipated, the volume of insurance M&A activity worldwide picked up notably in 2021. Despite the pandemic continuing to shape the economic and political landscape, investor sentiment strengthened in most regions as re/insurers rode the wave of rising prices across all product lines to generate healthy top line growth.”
In 2021, the company said there was a rebound in the number of large transactions with 25 mega-deals in excess of $1bn compared to 20 in 2020, including the year’s largest, Regent Bidco Ltd’s takeover of RSA Insurance Group PLC for $9.2 billion.
Edwards added: “Signs that market hardening is slowing down in certain classes, combined with the pressure of rising costs means that for those businesses looking to expand, the decision on whether to grow through acquisition or by building out existing operations has never been more relevant.”
Clyde & Co. said in a statement that the pandemic had accelerated innovation in the industry with re/insurers prepared to buy, fund, or partner with the technology companies that can help provide product innovation and greater agility to deliver a competitive advantage. Insurtechs, particularly in the US, are growing at pace, with some reaching a stage of maturity that is allowing them to look at acquisitions themselves on the path to greater size and market share and/or being ‘full stack’ insurance businesses.
Vikram Sidhu, partner at Clyde & Co., said: “Investment flowing into the insurtech space keeps growing strongly. The successful insurtechs are at a place where, for various reasons, they want to have that ‘full stack’ insurance business, rather than simply being MGAs that sell policies on behalf of other carriers. These companies want to grow bigger and control their destiny.”
The firm said that the current sentiment will remain positive over the next year.
It added: “We expect that M&A deal activity will remain buoyant and that completed deals will exceed 200 worldwide in the first half of 2022, rising above 220 for the second half of the year.”
