First-quarter mergers and acquisitions involving U.S. and Bermuda-based insurance industry companies produced an aggregate deal value of $21.16 billion, according to a report Monday from S&P Global Market Intelligence.

This year’s first-quarter tally tops full-year deal totals for 2019 and 2020.

“Insurance carrier M&A activity seems poised to at least double in 2021 and could mark one of the strongest years in the last quarter-century,” S&P said.

The report also noted Chubb Ltd.’s $23 billion offer for Hartford Financial Services Group Inc., which Hartford spurned as inadequate, as well as American International Group Inc.’s planned separation of its life and retirement business.

Should Hartford ultimately agree to a sale in 2021 and AIG find a partner to invest in the life and retirement business, S&P estimates aggregate deal value could reach $71.65 billion, an increase of 269.5% from 2020.

Alternately, if a deal for Hartford does not happen and AIG opts for a life and retirement initial public offering, this year’s insurance carrier deal value could be $40.55 billion in the aggregate, a smaller 109.1% increase from 2020.

Despite the strong aggregate totals, the deal value for property/casualty carrier transactions fell to the lowest point for a first quarter since 2013 at just $923.5 million.

S&P’s base case for 2021 property/casualty carrier deal value of $10.47 billion adds the median inflation-adjusted activity for the final three quarters of the previous 10 years to the first quarter’s announced total. The high case for $38.94 billion in activity assumes a sale of Hartford at a price that approximates the tangible book multiple that Ace Ltd. agreed to pay in its 2016 acquisition of Chubb Corp. pegged at 1.855x.

The two largest first-quarter P/C deals, according to an S&P spokeswoman, were Mayfield Village, Ohio-based The Progressive Corp.’s $338 February acquisition of Carmel, Indiana-based Protective Insurance Corp., and the $586 million deal in January to take Morristown, New Jersey-based specialty insurer ProSight Global Inc. private by TowerBrook Capital Partners LP, which is based in London and New York, and New York-based Further Global Capital Management LP.

Broker/agency consolidation activity as measured by the number of transactions involving U.S. targets slowed by 18.2% on a year-over-year basis in the first quarter.  

Full-year activity in the sector will top 600 transactions for a fifth consecutive year given that private equity-backed buyers are still on the prowl for acquisitions, S&P said. Its 2021 deal projection, however, anticipates a decline of approximately 11.4% from the 2020 total of 699 transactions and is contingent upon President Joe Biden's plan to revise the U.S. tax code.

President Biden announced a proposal on March 31 to increase the corporate tax rate to 28% from 21% and indicated he would be “putting forward additional ideas in the coming weeks” pertaining to individuals.