Insurance-sector M&A hit H1 record for deal count, could hold the pace

M&A in the global insurance industry hit a ten-year high for deal count in the first half of 2022, with abundant private equity capital, carrier repositioning via back book and run-off sales and some wobbling amongst insurtechs all on hand to help maintain the pace.

In the first half of 2022, the M&A deal volumes rose 9.5% percent year on year to 242, the highest count since 2012, a report by UK law firm Clyde & Co. shows.

“A number of factors are driving deals,” authors say, admitting caveat for increased buyer uncertainty on outlook as macroeconomic conditions evolve.

To date, decisions by carriers to offload run-off lines and back books have helped drive the nominal deal count. That trend is likely firmly in place, Clyde & Co. claimed.

Buyers remain primed on abundant capital. Private equity firms and asset managers especially “are still keen to explore either entry into the insurance market or expansion of existing footprints.”

Insurtechs could rise in prominence on the deal list. As economic and market metrics have faltered, they have started to suffer “flagging” valuations, drawing renewed attention from both PE buyers and traditional carriers looking to take a leap forward in digitization, authors noted.

“Although the uptick in insurtech companies finding funding and going public seems promising, the heightened risk to these companies due to the current economic climate lingers,” Clyde & Co partner Marc Voses (pictured) said. “With more than 450 insurtechs failing over the past decade, success has proven to be an exclusive club for many.”

In the first half of 2022, the Americas rose to account for more than 50% of global transactions on a 22.2% rise in the deal count to 132, including 103 in the US and 8 in Bermuda.

The Americas account for 11 of the largest 20 deals recorded. The $7.7 billion merger of Apollo Global Management and Athene Holdings tops the list.

But the growth in the overall nominal deal count comes on a move into smaller deals. Mega deals are down: The H1 tally includes 13 deals value at over $1 billion, half the count from H1 2021.

Deals in Europe were nearly 10% off their prior year level, despite the European focus on run-off and back book sales.

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