Property/casualty insurers and reinsurers used mergers and acquisition to penetrate new geographical markets during the first half of 2014, according to a special report issued by A.M. Best Co., Inc. on Monday
The 35 property/casualty deals tracked by Best thus far in 2014 totaled approximately $5.60 billion, compared with just over $10.0 billion of deals for all of 2013, according to “M&A Activity for P/C and Reinsurance Focuses on Global Diversification.”
Geographical diversity drove activity. “Similar to that of the past few years, much of the M&A activity in the P/C industry during the first half of 2014 was driven by consolidation or companies attempting to enter new markets such as Asia and Latin America,” Best said in its report.
Australia and Asia accounted for about $1.7 billion in deals, second only to North America and Bermuda, which had $2.8 billion of deals, said Best. Europe lagged with approximately $1.1 billion in deals.
The average size of deals in the first half of 2014 dropped 13.0% to approximately $160 billion from $184 million in 2013, according to the report.
Best also said that companies are pursuing acquisitions in a difficult organic growth environment.
“A.M. Best has noticed that some insurers now understand that organic growth remains challenging at this stage of the cycle, making acquisitions an attractive alternative to growing the business internally,” said the report.