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:
- 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.
- P&C impact: Due to of organic growth, M&A will continue in the P&C subsector with small-to medium-size specialty carriers.
- 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
- Managing general agents (MGA): Brokers interested in alternative distribution opportunities may look to acquire digital MGAs in 2018.
- insurtech investment: Pressure will continue to build on insurance companies to invest in InsurTech, either by acquiring a technology startup, becoming a minority owner.
- 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.
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:
- Modularization of the insurance value chain
- Tax reform and regulatory policy
- Emergence of new buyer types
- Continued demand by foreign buyers to invest in the US market
- InsurTech: Buy, invest, or partner?
- Divesting noncore business
For more information please contact Marco Vet via the contact details given below.