By Louis Goss
Insurance sector M&A deals surged to a 10-year high in 2022, as the end of Covid-19 drove an uptick in deal-making activity.
Insurance companies completed 449 M&A deals last year, marking the highest number of deals for a decade, new data from Clyde & Co shows.
The surge in deals, from 418 in 2021 to 449 in 2022, came as execs regained confidence in markets following the end of Covid-19, the report said.
This saw the release of pent-up demand, as insurance companies finalized deals that had been put on hold during the pandemic.
“Deals that were put on hold during the pandemic continued to come to market in 2022, maintaining the upswing in deal-making that began the previous year,” Clyde & Co chair Eva-Maria Barbosa said.
The outlook for insurance sector M&A deals, however, remains uncertain looking into 2023 as insurance execs have now reverted back to a more cautious approach in seeking to navigate the downturn.
“Looking ahead, underlying trends point to mixed investor sentiment,” Barbosa said. “Deal-makers in the Americas and Europe are displaying a heightened sense of caution as they switch to wait-and-see mode in the face of market uncertainty.”
The report said mid-market players will likely take a more cautious approach than the biggest firms in the sector, as it argued the world’s top players are keen to plough on with plans for expansion in the face of difficult conditions.
“Large global insurance businesses seem undeterred by market conditions,” Barbosa said, as she argued some top firms see M&A activity as the only viable route to fast-paced growth.
The report, however, notes the world could see another release of pent-up M&A deals in the near future, if markets begin to stabilise.
“As investor sentiment improves, ambitious insurers, particularly at the top end of the market – as well as private equity houses – will move to seize these opportunities,” Barbosa said.
The post Insurance sector deal-making hits decade high but 2023 outlook remains shaky appeared first on CityAM.
