‘Steady Pace’ for M&A Deals in Insurance Sectors

Global merger and acquisition (M&A) activity in the property and casualty (P/C) insurance and reinsurance sectors continued at a steady pace in the first half of 2014.

Based on research by AM Best, a total of 35 P/C and reinsurance deals were announced globally during the first six months of 2014. The available disclosed amount for all deals was approximately US$5.6bn, compared to just over half the total of about $10bn announced for all of 2013.

Continuing the trend of the past few years, much of the M&A activity in the P/C industry during H114 was driven by consolidation or companies attempting to enter new markets such as Asia and Latin America. Although not included in the six-month 2014 deal count, one example of this trend was Ace Limited’s July 4 announcement that it will be acquiring the commercial business of Itaú Seguros in Brazil for nearly US$700m – making Ace one of the major players in the region.

From the sell side, increased competition, low interest rates and lower insurance rates have prompted many companies to downsize through the divestiture of underperforming or non-core business lines.

AM Best added that it has noticed that some insurers now understand that organic growth remains challenging at this stage of the cycle, making acquisitions an attractive alternative to growing the business internally.

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