Insurance-sector mergers soar in first half of 2018: PwC

The value of mergers and acquisitions in the insurance industry rose steeply for the first half of 2018, according to a new report from PwC.

The half saw 247 announced deals in the insurance sector with a total disclosed deal value of $28.6 billion, PwC, also known as PricewaterhouseCoopers, said in its U.S. Financial Services Deals Insights Q2 2018 report, released Thursday.

This compares with 302 deals worth $10.1 billion in the first half of 2017. “This was primarily as a result of Axa’s announced acquisition of XL Group for $15.4 billion and AIG’s announced acquisition of Validus for $5.6 billion,” the report said.

Five of the announced deals in insurance were in excess of $1 billion of value, compared with seven such deals during all of 2017, the report said.

Insurance broker deals comprised 87% of announced deal volume as “effects of tax reform are becoming clearer and may encourage deal activity the remainder of the year,” the report said.

Insurers are also expected to continue to divest capital-intensive, closed blocks or underperforming businesses, it added.

“Insurance M&A rose, thanks to mega-deals and effects of the federal tax overhaul. Announced deal value in the sector for the first half of 2018 nearly tripled that of the same period in 2017, with most deals involving insurance brokers. Tax changes could keep spurring activity in the months ahead,” the report said.

Overall in the quarter, there were $54.70 billion worth of announced transactions in the financial services sector, including banking and capital markets, up 60% from the same period in 2017, the report said. Total deal volume of 392 announced deals, however, was down 22% from the same period last year and 20% from the first three months of the year, the report said.