Global insurance M&A hits highest level with $44.4bn in 1H18 since financial crisis
Source: Middle East Insurance Review | Dec 2018
The deal value for global insurance M&A reached $44.4bn in the first half of 2018, driven by a slew of megadeals which pushed value to its highest first-half total since the financial crisis, according to a recent report from Willis Towers Watson and Mergermarket.
The first half of the year saw 14 deals worth over $600m taking place in this sector, although total deal volume was down to just 84 deals, the lowest number since 2009.
Key deal drivers behind this surge in value relate to the changing nature of business models. As regulatory pressures become the norm, new models are emerging, and more businesses are seeking to return to their core strategies.
A growing trend for companies wishing to take this approach is to divest unwanted parts of their business, meaning that valuable assets are once again on the market. For private equity investors, record levels of inflow – with dry powder levels reaching $1tn in 2017 – has driven interest in these assets and seen complex acquisitions from these buyers in 2018.
Regulatory change has also played a significant role in relation to US assets as tax reform in the region has provided an immediate boost to company earnings since the turn of the year, which means US insurers instantly became more attractive to foreign insurers who see the potential to earn more from the US than before.
While these drivers support a positive outlook for global insurance M&A in the coming months, time to market may extend the phase to execution, given higher deal values and potential deal complexity. M