While uncertainty around the UK’s withdrawal from the EU has acted as a brake on European M&A activity as re/insurers focus on post-Brexit strategies, Clyde & Co expects the volume of deals in the region to increase once firms’ Brexit preparations are complete.
Transactions have slipped down the agenda as insurers outside Europe have been putting potential acquisitions on hold until the situation becomes clearer, while entities impacted by Brexit arrange contingency plans, setting up subsidiaries and branches to ensure that they can continue to operate across Europe.
In response to Brexit uncertainty, insurers and reinsurers who could be affected by the possible loss of passporting rights have by and large restructured their operations, as such, Clyde & Co said it expects “transactions to move further back up the management agenda and, with some of the uncertainty removed around the structure of possible European targets, an increase in deals is likely.”
The majority of firms have opted to set up a subsidiary or branch to ensure businesses can continue to operate across Europe following the UK’s exit from the EU, analysts noted that very few have chosen to acquire a European entity, with JLT’s acquisition of specialty Belgian broker Belgibo from Exmar Group being a rare exception.
Meanwhile, in other parts of the globe such as Asia, analysts forecast this could impact volume of deals where there is not the same degree of market uncertainty and deals may be perceived as easier to get over the line.