Mergers and acquisitions in the insurance industry hit a significant low in 2024, marking the lowest activity in 16 years. A recent report from Clyde & Co. highlights that global insurance mergers and acquisitions (M&As) dropped to just 204 completed transactions, down from 346 in the previous year. This decline is largely attributed to a mix of uncertainty and volatility that plagued the market throughout the year.
Several factors contributed to this slowdown. Softening markets, a tougher claims environment, and concerns over catastrophe risks made companies hesitant to pursue deals. Additionally, changing regulatory landscapes and a decrease in activity from private equity firms added to the overall uncertainty. The report noted that many deals took longer to finalize, further complicating the landscape.
Despite the drop in the number of transactions, the total value of M&A deals actually increased, thanks in part to a few large-scale agreements. Deloitte’s 2025 Insurance M&A Outlook suggests that shifting economic conditions and tax reform uncertainties are influencing how companies approach deal-making.
The U.S. market led the way with 69 deals, primarily driven by activity in the life insurance sector. In contrast, the UK and Europe experienced the most significant decline, with a staggering 48% drop in M&A activity.
High interest rates, geopolitical instability, and increased regulatory scrutiny have also played a role in reducing the number of deals. However, the global managing general agent (MGA) sector has seen some growth, as insurers in the U.S., Europe, and the Middle East are investing more in this area.
Looking ahead, both Clyde & Co. and Deloitte predict a rebound in M&A activity for 2025. Nine out of ten insurance companies surveyed by Deloitte expect more deals this year, driven by pent-up demand and strategic restructuring efforts. There is a growing interest in environmental, social, and governance (ESG) factors, which many firms now consider crucial when evaluating potential mergers.
Insurtech companies are also becoming attractive targets for acquisitions, thanks to their advanced technologies in underwriting and fraud prevention. Foreign investment in the insurance market is anticipated to rise, particularly in the U.S. excess and surplus lines market, as investors seek steady returns.
While the outlook for M&A activity is optimistic, challenges remain. The differing regulatory environments across countries could both encourage and hinder deal-making. The Clyde report notes that regional consolidation, especially in the Middle East, is likely to continue, alongside a trend of increasing MGAs.
In summary, while 2024 saw a decline in mergers and acquisitions within the insurance sector, experts believe that 2025 will bring renewed activity as companies adapt to changing conditions and seek new opportunities.