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Mergers and acquisition value soared even as deal volume was down in the insurance sector in 2018, according to a report Thursday from PricewaterhouseCoopers LLP.
Deal value in the insurance sector rose 106% during 2018 compared with 2017, while deal volume decreased by 13% with a total of 533 deals announced in 2018.
Fourth-quarter activity pushed total disclosed deal value to $40.3 billion during 2018. This compares with total disclosed transaction value of $19.5 billion in 2017, PwC said.
The insurance sector recorded 151 announced deals in the fourth quarter, with a total disclosed value of $2.2 billion. This compares with 170 announced transactions with a total disclosed value of $7.5 billion during the same quarter in 2017, the report said.
The largest transaction during the fourth quarter of 2018 was Brown & Brown Inc.’s acquisition of Hays Companies for $700 million while the largest transaction for 2018 was Axa SA’s announced acquisition of XL Group during the first quarter of 2018 for $15.4 billion, PwC said.
The insurance sector saw nine deals during the first three quarters of 2018, the value of which exceeded $1 billion, with a total disclosed deal value of $34.2 billion. While there were seven deals in 2017 that exceeded $1 billion, total disclosed deal value for these mega deals was only $13.9 billion.
No mega deals were announced during the fourth quarter of 2018, the report said.
Deals involving the relatively fragmented insurance broker subsector continued to dominate deal volume during 2018, making up 87% of the total transactions.
“Financial services deals are roaring across all sectors at values we haven't seen for many years. M&A opportunities are ripe among regional banks, FinTech, asset and wealth management, payments businesses, and all types of insurance firms,” Greg Peterson, U.S. financial services deals leader for PwC, said in the report.
Deal momentum should continue into 2019, the report said, led by corporate and private capital.
“The surge shows no signs of weakening in 2019 thanks to digital disruption, market volatility, and the clear gains from consolidation,” PwC said in the report. “We expect corporate, venture, and private equity to play a bigger role in acquisitions and minority investments both inside and outside the U.S.”
There were 280 announced and reported mergers and acquisitions for U.S. and Canadian insurance agents and brokers during the first half of 2018 compared with 333 in the same period 2017, a drop of nearly 16%.