Insurance sector mergers surge

The value of merger and acquisition activity in the U.S. insurance sector surged to $8.1 billion during the third quarter, according to a report released Wednesday by PwC.

That compares with $1.9 billion during the comparable period in 2017, according to PwC Deals: US Financial Services Deals Insights Q3 2018. The report found that two deals accounted for more than half the total value, with private equity leading the biggest transaction. Apollo Global Management LLC announced the acquisition of Aspen Insurance Holdings Ltd. for $2.6 billion, and Hartford Financial Services Group Inc. said it is purchasing Navigators Group Inc. for $2.17 billion.

“Deals involving the relatively fragmented sub-sector of insurance brokers continued to dominate deal volume during the third quarter, making up 87% of total transactions,” said the report.

“In coming months, insurers probably will continue to sell capital-intensive, closed blocks, or underperforming businesses,” the report predicted. “Moreover, changes from the federal tax overhaul in January, including a reduction in the corporate tax rate, may spur deals during the fourth quarter and into 2019. Private equity firms are especially focused on the insurance sector, in part because of the reduced tax rate.”