M&A: Search for scale to drive activity

06-10-2016

Christian Wuestner

M&A: Search for scale to drive activity

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In the current challenging soft market and low interest rate environment, large re/insurance companies are in an advantageous position as they can better absorb the pressure and find alternative income sources. Search for scale is therefore likely to drive M&A activity in the coming years, Intelligent Insurer reports.

Deal volumes in mergers and acquisitions (M&A) are likely to be lower this year as merger activity takes a break because the industry is focusing on developing strategies and rebalancing portfolios in line with Solvency II rules. But there are many reasons to believe that activity is going to pick up again soon.

Aggregate deal values of M&A activity jumped 238 percent year over year in 2015 to $67.6 billion, driven by property/casualty, according to Deloitte’s 2016 Insurance M&A Outlook, making it the most active year ever for M&A across all insurance industry sectors. In life & health the number of deals and aggregate deal value picked up, but far from past heights, according to the report. Property/casualty registered record price/book value multiples in 2015 while the number of deals fell.

“2016 will therefore be interesting for insurance M&A as it will be characterised by players defining targets and strategy resulting in a lot of M&A activity.” Pia Tischhauser, Boston Consulting Group


M&A, Europe, North America, Lloyd's, Richard Baddon, Pia Tischhauser, RSA, QBE

Intelligent Insurer