Insurance M&A deals slow, rebound seen in H2 2022: PwC

Insurance sector deal activity has slowed by almost a third in the front half of 2022 but is expected to turn back up, according to a report Thursday from PricewaterhouseCoopers LLP. 

For the six-month period from mid-November through mid-May, there were 343 announced transactions totaling $15.4 billion in announced deal value, compared with 476 announced transactions totaling $31.4 billion in deal value in the previous six-month period, a 28% decline in transaction volume.  

Deal activity slowed further in the second quarter of 2022, with only 27 announced deals from the end of March through mid-May, PwC said.  

Brokerage transactions constitute the majority of sector deals, according to PwC. Of the 343 announced insurance deals, 313 were brokerage target companies, with the remaining 30 deals in the underwriting space.  

The forecast for the second half of the year, however, is for deal activity to rise again. 

“Although deal activity slowed in the first half of 2022 due to the overall economic environment, we expect deal activity to rebound in the second half of the year driven by strong interest in the sector from PE-backed buyers,” PwC said in its report. 

Buyers may emerge for life and long duration property and casualty businesses that have struggled to generate investment returns in a low interest rate environment, but may be able to rebalance portfolios and generate more sustainable earnings. 

Renewed interest is also expected in insurtech, which has “underperformed overall equity markets,” PwC said.