2018 Insurance Industry Outlook

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2018 Insurance M&A Outlook

An continuous active insurance marketplace

2016 and 2017 brought an evolving industry and M&A landscape. For 2018, it is expected that this will continue as well, setting the stage for a positive deal-making environment. In the 2018 M&A Outlook we address several trends that will most likely occur.

A changing landscape

The 2018 outlook anticipates that M&A deal volume and value will remain generally consistent with what we’ve experienced since 2011 (with the exception of 2015) and be comprised primarily of smaller transactions valued at less than $2 billion.However, it must be noted that some bigger deals are expected as well. 

The insurance M&A marketplace is expected to evolve in a number of ways:  

  1. L&H growth: L&H businesses should continue to grow through acquisition, as lagging consumer demand for life insurance and annuity products continues to inhibit organic growth.
  2. P&C impact: Due to of organic growth, M&A will continue in the P&C subsector with small-to medium-size specialty carriers.
  3. Uncertainty in reinsurance: The reinsurance market, which has been dealing with persistently soft rates for almost a decade, faces significant uncertainty on whether it can secure notable rate increases in 2018.Increase in run-off transactions
  4. Managing general agents (MGA): Brokers interested in alternative distribution opportunities may look to acquire digital MGAs in 2018.
  5. insurtech investment: Pressure will continue to build on insurance companies to invest in InsurTech, either by acquiring a technology startup, becoming a minority owner.
  6. Change at the top: The global insurance industry has experienced a lot of change at the top in the last 18 months or so. Multiple globally prominent insurers have announced new global and/or regional CEOs.
2018 Insurance M&A Outlook

Drivers and trends for 2018

Insurance company executives contemplating M&A in 2018 - whether that means selling, buying, or partnering - should consider planning for and addressing seven trends that are evolving the insurance M&A market over time and and may either help or hinder their ability to execute on their plans:

  1. Modularization of the insurance value chain
  2. Tax reform and regulatory policy
  3. Valuations
  4. Emergence of new buyer types
  5. Continued demand by foreign buyers to invest in the US market
  6. InsurTech: Buy, invest, or partner?
  7. Divesting noncore business 

More information?

For more information please contact Marco Vet via the contact details given below.

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