2019 Insurance Mergers and Acquisitions Outlook

Analysis

2019 Insurance M&A Outlook

Positioning for growth

What are the trends and drivers that will impact the insurance mergers and acquisitions market in 2019? How are tax reform, loosened regulations, and higher valuations expected to shape deal making? Will InsurTech continue to be in high demand? Learn why insurance M&A is well-positioned for growth in the year ahead in our new report.

What’s ahead: An active insurance M&A marketplace

The stage is set for the continuation of an active insurance industry mergers and acquisitions (M&A) environment in 2019. Sustained US economic growth, rising interest rates, and higher investment income are among the positive factors bolstering insurance companies’ results in 20181 and positioning them for enhanced top- and bottom-line growth in the new year.2 In addition, debt rates are relatively low, available capital remains abundant, and 2018 deal volume and value support sustained or increased deal-making.

One factor likely to be a potential influencer is the whipsawing stock market. If falling prices and sell-offs extend far into 2019, they may spur companies with strong balance sheets to scoop up distressed assets or ratchet up corporate uncertainty and reduce M&A activity. Of the two possibilities, we anticipate an uptick in M&A, given current industry dynamics.

Drivers of insurance M&A activity

Insurance company executives who are considering opportunities to buy, sell, or partner in 2019 should consider these four trends that will influence the insurance M&A outlook:

Moving forward on 2019 insurance M&A opportunities

Insurance companies contemplating M&A to boost their bottom line, broaden their product portfolio or geographic reach, and strengthen future competitiveness should:

  • Evaluate where the industry is going, where your business is going, and where the two align.
  • Conduct scenario planning that accounts for a potential economic correction in the next 18-24 months.
  • Develop an M&A strategy that supports your goals and frames your appetite in approaching market opportunities.
  • Select targets consistent with your overall strategy. Avoid chasing a shiny object that may not support long-term goals.
  • Be mindful of the changing tax and regulatory landscape.
  • Examine in-house corporate development and overall integration capabilities to facilitate efficient and successful transactions.
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A dynamic environment

In today’s dynamic insurance M&A environment, deal sizes and values may range from modest to transformative. Both experienced and first-time buyers/sellers that adhere to a well-thought-out strategy will be able to move forward confidently and stay true to their goals.

For more on these insurance M&A drivers and trends, download the 2019 Insurance M&A Outlook. Our report focuses primarily on conditions and activity in the US and Bermuda, and we’ve also included an appendix with snapshots of M&A activity in several other global markets.

Visit our Insurance industry page for broader industry insights, analysis, and resources.

Look again

In today’s rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry sectors. What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward thinkers.

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Endnotes

1 2019 Insurance Outlook: Growing economy bolsters insurers, but longer-term trends may require transformation, Deloitte Center for Financial Services, 2018.
2 Matthew Lerner, “Economic growth helps insurers, reinsurers in 2018,” Business Insurance, August 14, 2018.
3 2019 Insurance Outlook: Growing economy bolsters insurers, but longer-term trends may require transformation, Deloitte Center for Financial Services, 2018.

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