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The value of insurer merger and acquisition transactions involving buyers or targets in the U.S. or Bermuda for full-year 2020 should exceed the deal value for 2019, while broker M&A deals slowed, according to a report Thursday from S&P Global Market Intelligence.
Through the first nine months of 2020, aggregate insurer deal value totaled $13.20 billion, compared with $6.36 billion in 2019, the report said.
Deal activity in the fourth quarter of 2019 totaling $13.81 billion, however, was the second-highest total for that period in the past decade.
Still, S&P sees the chance for 2020’s total to best that of 2019.
“Development such as Arch Capital Group Ltd.’s $538.1 million agreement to acquire the remaining outstanding shares of Watford Holdings Ltd., reports of MetLife Inc.’s potential sale of its property and casualty business at a reported asking price of between $3 billion and $4 billion and Assurant Inc.’s launch of a strategic review of the preneed business underwritten by American Memorial Life Insurance Co. and Union Security Insurance Co. provide reason for optimism that the full-year total can exceed 2019’s $20.17 billion result,” S&P said.
Broker M&A slowed but may pick up again, S&P said. Broker deals declined by 15.3% through the first nine months of 2020 to $426 million, data from the report showed.
Deals involving U.S. broker and agency targets have slowed from the “record-setting pace” of the previous two years, but may pick up after the U.S. presidential election, S&P said.
“…potential sellers will push to close transactions by the end of December owing to concerns about the potential negative effects on net sale proceeds from long-term capital gains tax proposals issued by Democratic presidential candidate Joe Biden,” said S&P.
Statistics exclude targets in the managed care sector and terminated transactions, according to the report.
A report by U.K.-based law firm Clyde & Co. LLP’s predicts a decline in global insurance merger and acquisition activities in the second half of the year due to the impacts of the COVID-19 pandemic, Asia Insurance Review reported. The ongoing market hardening has been accelerated by the pandemic, creating new opportunities for organic growth, which could adversely impact the M&A activities.