Sidley Austin, a global law firm, has released its Global Insurance Review, offering an optimistic outlook for the US insurance mergers and acquisitions (M&A) market in 2024 following a challenging year in 2023.
According to Sidley’s report, the difficulties of 2023 were primarily attributed to slow M&A activity in the P&C market. In the US, total deal value plummeted to $5.9 billion, a significant decrease of 59% compared to $14.4 billion in 2022.
However, despite this decline, 2023 witnessed several strategic transactions, often aimed at bolstering scale and consolidation within the industry.
One notable P&C deal in 2023 was the successful acquisition by RenaissanceRe Holdings Ltd. (RenRe) of Validus Re and its subsidiaries from American International Group (AIG), valued at $2.985 billion. This single transaction represented roughly half of the total deal value for the year.
Sidley’s commentary suggests that despite the challenges faced in 2023, the US insurance M&A market has shown resilience, fostering a sense of optimism as the industry moves forward into 2024.
Furthermore, Sidley states, “We expect that reinsurance will continue to help close the gaps in the insurance M&A market, as it allows companies to isolate specific risks and assets to be sold without the need for the buyer to assume all enterprise-wide liabilities.”
“At the same time, however, buyers may be weary, given the cost of debt remaining inflated and the tumult caused by two ongoing conflicts in the Middle East and Ukraine,” Sidley concludes.
