In 2021, the volume of finalized mergers and acquisitions in the property & casualty insurance space increased 2.7%, according to Clyde & Co., which reported the year saw 418 transactions close compared with 407 the year prior.
Additionally, the number of “mega deals,” those valued at $1 billion or more, increased slightly with 25 closing in 2021 compared with 20 the previous year.
“As anticipated, the volume of insurance M&A activity worldwide picked up notably in 2021,” Ivor Edwards, head of Clyde & Co.’s European corporate insurance group, said in a release. “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.”
The Americas, which accounted for more than half of global deals, saw an increase of 17% in M&A activity compared with the year prior, according to Clyde & Co., The U.S. saw the most of those transactions, accounting for 180 deals in 2021. That was the most deals completed in the P&C space since 2015.
M&A activity in Europe increased 21% year on year, while the Asia Pacific and Middle East & Africa markets saw activity decline more than 40% compared with the year prior.
The pandemic accelerated the digital transformation of the P&C industry, and reinsurers quickly looked to buy, fund or partner with technology companies that provide innovations that deliver distinct competitive advantages, according to Clyde & Co.
This trend is most pronounced in the U.S., where some insturtechs have reached a scale that allows them to make their own acquisitions as they aim for greater size, market share or to become “full stack” insurance businesses.
Vikram Sidhu, Clyde & Co partner in New York, explained: “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.”
For the coming year, Clyde & Co. projects more than 200 deals will close in the first half, while the second half will see in excess of 220.
“Despite continued interest from strategic buyers and private equity, a continued lack of suitable acquisition targets in markets like Europe and Asia will be a feature,” Joyce Chan, Clyde & Co. partner in Hong Kong, said in a release. “However, the MENA (the Middle East and North Africa) region is expected to see a burgeoning M&A market this year, with more activity in GCC (Gulf Cooperation Council) countries than has historically been the case.”
