DUBAI: There were 407 completed mergers and acquisitions (M&A) worldwide in the insurance sector in 2020, down from 419 the previous year. An anticipated pandemic-induced dip in activity in the second half of the year failed to materialise, however, with 206 deals in H2 2020, slightly up from 201 in the first six months, according to Finding opportunity in adversity, the latest edition of global law firm Clyde & Co’s insurance growth report, released today.
The Middle East and Africa saw the biggest gains in percentage terms, albeit from a low base, with 32 completed deals in 2020, up from 12 the previous year. The Americas remained the most active region for M&A in terms of volume, with 192 deals in 2020. It saw a spike in the second half of the year with 102 transactions – the highest number for five years – up from 90 in the first six months. Asia Pacific saw 75 deals, up from 69 in 2019, with M&A accelerating through the year. In contrast, activity in Europe was down by almost a third year-on-year, to 103 from 155 in 2019.
“The prospect of increased M&A activity in the Middle East has long been predicted by legal commentators. Low penetration rates and highly competitive markets have seen as being ripe for consolidation. However, historically there have been significant road blocks in key markets such as the UAE and KSA due to a combination of unrealistic pricing expectations, a reluctance to sell to competitors and significant regulatory hurdles in acquiring substantive holdings in listed entities. 2020 appears to have been a watershed in the industry. This is due to a combination of regional players seeking to expand their footprint or grow the scale of their operations and some international players consolidating operations into key markets. We are witnessing a growth in insurtech allowing operational efficiencies for those players willing to invest. There have also been significant moves by regulators to encourage consolidation, with increased capital requirements for insurers and intermediaries becoming a feature of many regional markets,” Peter Hodgins says.
“Insurance transaction activity worldwide belied expectations in 2020. Deal-makers in the insurance industry, like many others, paused for reflection in the first half of the year, but not for long. Strategic players in the market and M&A specialists clearly did not want to be relegated to the side lines and quickly regrouped to identify and pursue opportunities. Given that remote working does not easily lend itself to negotiations, due diligence and all the other elements that make up a transaction, the speed with which companies adapted to the new environment was impressive. With deal announcements continuing apace, we expect the level of completed M&A in the coming months to accelerate as re/insurance businesses scent opportunities to build scale, generate efficiencies and reach new customers in new markets,” Ivor Edwards, Head of Clyde & Co’s European Corporate Insurance Group, says.
DUBAI: There were 407 completed mergers and acquisitions (M&A) worldwide in the insurance sector in 2020, down from 419 the previous year. An anticipated pandemic-induced dip in activity in the second half of the year failed to materialise, however, with 206 deals in H2 2020, slightly up from 201 in the first six months, according to Finding opportunity in adversity, the latest edition of global law firm Clyde & Co’s insurance growth report, released today.
The Middle East and Africa saw the biggest gains in percentage terms, albeit from a low base, with 32 completed deals in 2020, up from 12 the previous year. The Americas remained the most active region for M&A in terms of volume, with 192 deals in 2020. It saw a spike in the second half of the year with 102 transactions – the highest number for five years – up from 90 in the first six months. Asia Pacific saw 75 deals, up from 69 in 2019, with M&A accelerating through the year. In contrast, activity in Europe was down by almost a third year-on-year, to 103 from 155 in 2019.
“The prospect of increased M&A activity in the Middle East has long been predicted by legal commentators. Low penetration rates and highly competitive markets have seen as being ripe for consolidation. However, historically there have been significant road blocks in key markets such as the UAE and KSA due to a combination of unrealistic pricing expectations, a reluctance to sell to competitors and significant regulatory hurdles in acquiring substantive holdings in listed entities. 2020 appears to have been a watershed in the industry. This is due to a combination of regional players seeking to expand their footprint or grow the scale of their operations and some international players consolidating operations into key markets. We are witnessing a growth in insurtech allowing operational efficiencies for those players willing to invest. There have also been significant moves by regulators to encourage consolidation, with increased capital requirements for insurers and intermediaries becoming a feature of many regional markets,” Peter Hodgins says.
“Insurance transaction activity worldwide belied expectations in 2020. Deal-makers in the insurance industry, like many others, paused for reflection in the first half of the year, but not for long. Strategic players in the market and M&A specialists clearly did not want to be relegated to the side lines and quickly regrouped to identify and pursue opportunities. Given that remote working does not easily lend itself to negotiations, due diligence and all the other elements that make up a transaction, the speed with which companies adapted to the new environment was impressive. With deal announcements continuing apace, we expect the level of completed M&A in the coming months to accelerate as re/insurance businesses scent opportunities to build scale, generate efficiencies and reach new customers in new markets,” Ivor Edwards, Head of Clyde & Co’s European Corporate Insurance Group, says.
