Research

Transformation in the global insurance market

The value of deals in the insurance M&A market has rebounded in the first half of 2018, driven by a slew of megadeals and a wide variety of drivers

October 31, 2018

We are delighted to introduce the latest Willis Towers Watson insurance M&A update for 2018, published in association with Mergermarket. In this edition, we focus on the deal drivers that are behind the surge in value and megadeals in 2018.

Whether acquiring to consolidate existing lines, dispose of non-core sectors or transform business models, the strategies behind deals are as diverse as they have ever been.

After years of preparing for and adapting to enhanced regulatory requirements, company boards have positioned themselves to be ready to take advantage. Major players have come back to the deal table as consolidation continues in the industry. Meanwhile, others offload businesses which they no longer feel are core to their business. The latter has led to renewed interest from private equity firms. Indeed, consortia of buyout houses have become common bidders this year, grouping together specialists that pick off parts of larger businesses to run more efficiently. This begs the question – will the record levels of dry powder in these funds ensure these investors become a mainstay in insurance M&A or will their typically short-term investment horizon keep them as occasional players?

Meanwhile, technology is an inescapable trend in all major business lines and sectors – and insurance is no exception. After a relatively slow start, insurtech is catching up with its fintech sibling. Threats from the likes of Apple and Google and a host of smaller start-ups are giving dealmakers pause for thought. This added level of competition, particularly in the P&C space, means insurers need to be ahead of the technology curve or they risk being left behind.

This report not only looks at the numbers and dynamics behind the key deals of 2018 but also considers the regional variations, compounded by varying international regulatory systems, and how some areas are keener to look globally than others.

For example, China, an increasingly important player on the insurance stage, is looking beyond its own borders and using the ‘Belt and Road’ initiative to spread its wings internationally. We examine the impact this growing world power has already made – and where it might go in the future. In 2018, there are enough different themes at play to ensure reasonable activity is sustained for some time to come. The question is where and when the next major megadeal will happen.

The full report is available via the Download link.