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There were 407 mergers and acquisitions completed worldwide in the insurance sector in 2020, down slightly from 419 the previous year, according to a report Thursday from global law firm Clyde & Co.
There were, however, 206 deals in the second half of 2020, up slightly from 201 in the first six months, and activity is expected to be robust in 2021.
Global insurance mergers and acquisitions activity “is set to soar in 2021,” Clyde said, adding that despite economic uncertainty and heightened deal scrutiny, an increase in M&A is expected in the next six months.
The Americas remained the most active region for M&A, with 192 deals in 2020, up 6% on 2019. Asia Pacific saw 75 deals, up 9% from 69 in 2019, while the Middle East and Africa saw 32 completed deals in 2020, more than double the 12 in 2019. Deal activity in Europe declined 34% to 103 from 155 in 2019.
A hardening market with rising premium rates and “a more optimistic outlook for most lines of business” will draw more capital and investors to the sector, Clyde said.
“The improving market conditions have seen insurers move to raise capital but are also attracting more funds into the industry, including from private equity, which will help finance more deals,” Eva-Maria Barbosa, a partner at Clyde & Co’s recently opened office in Munich, said in the report.
Deal volume could top 220 in a six-month period for the first time since 2019 and could go even higher in the second half of the year, Clyde said.
“Deal-makers’ appetites have returned, buoyed by growing confidence in the economic outlook and the sense that there are opportunities to be had,” Ivor Edwards, head of Clyde & Co’s European Corporate Insurance Group, said in the report.
Mergers and acquisitions in the insurance brokerage sector increased modestly to 754 deals announced in 2020, compared with 744 in 2019, according to a report Wednesday from S&P Inc.