Re/insurers were driven to complete mergers and acquisitions (M&A) in 2018 in order to shed non-core business operations or acquire complementary entities, according to a new study by investment management firm Conning.
Conning’s study tracked and analysed U.S and non-U.S insurer M&A activity across property-casualty, life-annuity and health/managed care insurance sectors.
2018’s most noteworthy deal was perhaps broking and advisory giant Marsh & McLennan Companies’ acquisition of Jardine Lloyd Thompson Group for $5.6 billion.
The acquisition saw another of the mid-sized global insurance and reinsurance brokers going to a new home, boosting Marsh & McLennan’s position in reinsurance broking and combining Guy Carpenter and JLT Re’s reach and expertise.
“Insurer and reinsurer mergers and acquisitions in 2018 were driven by the need to respond to multiple pressures,” said Scott Hawkins, a Director, Insurance Research at Conning.
“Competition, changes in accounting and regulatory methodologies, the need to improve technology capabilities, and the search for greater profitability all contributed to drive mergers and acquisitions.
“Supporting M&A in 2018 was the continued access to capital both within and external to the industry.”
Steve Webersen, Head of Insurance Research at Conning, added that carriers are building scale to better compete and removing drags on their balance sheets by exiting non-core business operations.
“We anticipate 2019 M&A activity levels to keep pace with recent years as competition in a low growth environment remains strong and insurers continue to pursue strategic realignment to respond.”
