The insurance company's purchases in the first quarter hit a 15-year low

Merger and acquisition (M&A) activity among insurance carriers in the first half of 2024 hit a 15-year low in first-half figures, with 103 deals completed, marking a 40% decline from the 171 transactions seen in the same period. 2023, according to Clyde & Co.

A significant decrease continued the trend from 2023, driven by inflation, rising interest rates, and rising consolidation costs. The first half of this year set a new low for H1 activity – the previous record was 162 deals in the first half of 2013.

Despite closing six billion dollars worth of deals – three in the US, two in Asia, and one in Europe – total transaction numbers are down significantly, with cross-border transactions concentrated in Europe, the Middle East and Asia.

Clyde & Co noted that wealthy carriers are taking part in deals in 2024, preferring to keep cash amid high interest rates. Anticipation of higher prices and the rising costs of integrating new technologies have further reduced activity.

With innovation widening the gap between outdated systems and modern platforms, technology integration has become a critical, expensive part of M&A deals. Talent acquisition also plays a major role in contract negotiations.

However, Clyde & Co's report suggests that the worst may be over, as the conditions for a potential recovery are beginning to align.

“Insurance M&A, for the remainder of 2024 to 2025, will likely be driven by larger scales,” said Clyde & Co partner Eva-Maria Barbosa (pictured).

“While the total number may not increase significantly, we are increasingly seeing multi-territorial deals with some major carriers now looking to take on books or businesses covering eight to 10 countries at once.”

Our colleague Peter Hodgins pointed out that the US election later this year could help resolve political uncertainty, which could fuel more jobs.

Regionally, the UK has seen little M&A activity so far in 2024, although there is growing speculation that larger deals could begin. UK-listed insurers are seen as particularly attractive targets due to their strong performance and low valuations. Small bolt-on deals and niche acquisitions should be expected in the near term.

Europe has been affected by the same factors that hamper global insurance deals, but the improving economic situation and political clarity may boost deals for many countries, especially with the implementation of the European Union movement order.

With 40 completed transactions, the US and Canada led the world in M&A activity in the first half of the year. Brookfield Reinsurance's $3.6 billion purchase of American Equity Investment Life was the largest deal in the world, and the US also saw a multi-billion dollar sale. Despite this, overall activity remains lower than normal in North America.

The Middle East continued to experience consolidation, with five transactions closed. Regional carriers are strengthening their positions to take advantage of regional growth opportunities. While other global players have retreated, specialized international insurers are focusing on reinsurance and trade credit by establishing operations at the DIFC in Dubai or the ADGM in Abu Dhabi.

Although M&A activity in the Asia-Pacific region has decreased compared to previous years, the decline has been more severe than in the US or Europe. Japan's biggest insurers continue to grow in the region, with several large cross-border deals bucking the global trend.

South Africa's M&A market has been markedly sluggish, largely due to high inflation, rising interest rates, and slow economic growth. Political uncertainty ahead of the May 2024 elections has also slowed deal-making.

Consolidation remains a major theme in South America, with HDI acquiring Liberty Seguros in Chile, Colombia, and Ecuador in 2024, building on its previous purchase of Liberty's Brazilian operations. This move has greatly strengthened HDI's presence across the continent.

Specialty insurers, especially in the property and casualty (P&C) market, are attracting more attention, driven by the growing importance of technology and data integration in M&A strategies.

Although deal conditions have been difficult, some companies that are doing well have used this time to plan for future growth. As market conditions begin to improve, a clear pattern of M&A activity is emerging, although the recovery will vary by region.

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