Top 10 Issues for Insurance M&A in 2013

Will 2013 be the year that insurance industry mergers and acquisitions (M&A) take off again after a prolonged period of stagnation? A flurry of activity by insurance companies to rebuild internal M&A capabilities may herald an uptick in M&A during 2013 as organisations seek to expand market share, distribution capabilities, product/service offerings, and economies of scale in the face of limited organic growth opportunities.

The current environment seems more conducive to accelerating M&A activity than a year ago: organic growth opportunities appear limited; insurance companies and PE firms are holding large amounts of excess capital that need to be deployed; and the stock market is doing well overall, which generates confidence. Also, Congress’ agreement to avoid the immediate impacts of the so-called “fiscal cliff” and continued improvements in the U.S. economy might encourage companies that have been holding back on M&A to pull the trigger. As a result, the industry could see activity of significance that it hasn’t for the past several years.