World insurance coverage M&A offers to surge in 2021
America remained the most active region for mergers and acquisitions with 192 transactions in 2020, up 6% year over year. In fact, there was an increase in transactions in the second half of 2020, with 102 transactions – the highest number in five years – compared to 90 in the first six months. In the Asia Pacific region, 75 transactions were completed, up 9% from 69 in 2019, with mergers and acquisitions accelerating over the year. The Middle East and Africa region increased from 12 deals closed in 2019 to 32 in 2020.
On the flip side, Europe saw deals drop by 34%, from 103 in 2020 versus 155 in 2019.
“Global insurance deals exceeded expectations for 2020,” said Ivor Edwards, head of Clyde & Co.’s European corporate insurance group. “Deal makers in insurance, like many others, took a break in the first half of the year, but not long. Strategic market participants and M&A specialists clearly did not want to be relegated to the sidelines and quickly regrouped to identify and pursue opportunities. Given that remote working is not easily suited for negotiation, due diligence, and all the other elements of a transaction, the speed with which companies adapted to the new environment was impressive. ”
Edwards added that Clyde & Co anticipates an increase in M&A completed in the coming months as re / insurance companies seize opportunities to achieve economies of scale, increase efficiencies and reach new customers in new markets.
Some of the trends observed by Clyde & Co include an expanded pool of targets as the pandemic forces companies to review their strategies and tweak which markets they want to be present in. Firms seek to move out of non-core businesses to free themselves up capital to be targeted in preferred business areas, especially in relation to toughening markets.
Additionally, rising premium rates and more optimistic outlooks for most businesses will make stronger market participants more likely to seek growth opportunities. The improvement in market conditions makes it attractive to investors like private equity funds, which allows more deals to be funded.
The pandemic has also accelerated technology adoption and increased interest in insurtech startups. The report cited several investments in US start-up insurer Hippo Enterprises, whose valuation soared to over $ 1 billion. Sompo to Acquire Stake in Japan’s Tier IV, a company that leads the development of open source software for self-driving technology; and Aviva is partnering with venture capital firm Anthemis to expand its insurtech investment activity.