A total of 418 M&A deals were reported across the global insurance industry in 2021, up from 407 deals in the previous year, driven by a rise in deals in the Americas and Europe, according to Clyde & Co’s annual Insurance Growth Report.
M&A deals were particularly high in the second half of the year with 221 deals worldwide – up from 197 for the same period in 2020.
These figures were driven primarily by activity in the Americas, which accounted for over half of the global annual total, with 224 deals in 2021. This represented an annual increase of 17% compared to 2020, with a particular focus on the US, where a total of 180 M&A transactions took place last year – the highest levels of deals for the country since 2015.
Europe also saw a rise in M&A activity of 21% y-o-y. This was buoyed by 74 deals in 2H2021, up from 51 deals in the first half.
By contrast, the Asia-Pacific and Middle East and Africa (MEA) regions saw significant falls in M&A activity. Asia Pacific saw a 44% drop in deals, from 75 in 2020 to only 42 in 2021, while MEA reported a 47% drop, from 32 transactions in 2020 to just 17 in 2021.
The report found that in 2021, there was a rebound in the number of large M&A transactions, with 25 ‘mega-deals’ with a value in excess of $1bn reported for the year, compared with just 20 mega-deals in 2020. This included Regent Bidco’s takeover of the RAS Insurance Group for $9.2bn, which was concluded in June 2021.
However, smaller niche acquisitions continue to be common worldwide as firms aim to strengthen their core offerings, while run-off markets in the US, Europe and the Middle East remain active.
Clyde & Co also said that it expected the M&A market to remain buoyant in 2022, as the world moves beyond the coronavirus pandemic. It estimates that completed M&A for 2H2022 will exceed 200 deals.
Clyde & Co partner in Hong Kong Joyce Chan said, “We are likely to see insurers and reinsurers positioning themselves for a more growth-oriented environment in the coming year, albeit with some regional variations. 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.”
Ms Chan also said that the Middle East and North Africa in particular should expect to see a burgeoning M&A market in 2022, and that as more mature InsurTechs in the US look for acquisition targets, others will look for opportunities to establish or expand their foothold in the insurance market.
Clyde & Co said that the pandemic has been a driver of M&A and other investment by insurers and reinsurers, with accelerated innovation motivating more companies to buy, fund or partner with tech firms for greater competitive advantages. M