The value of M&A activity in the US insurance sector surged to $8.1 billion during the third quarter, a more than fourfold jump above the $1.9 billion during the comparable period in 2017. Two deals accounted for more than half the total value, with private equity leading the biggest transaction. Apollo Global Management announced the acquisition of Aspen Insurance Holdings for $2.6 billion and The Hartford said it is purchasing Navigators Group for $2.17 billion.
In other large deals, Western & Southern announced the acquisition of Gerber Life Insurance Company for $1.55 billion, and China Reinsurance (Group) Corporation reported the purchase of the Chaucer Group from Hanover Insurance Group for $865 million. In addition, Marsh & McLennan Companies Inc. said that it is buying London-based Jardine Lloyd Thompson (JLT) for $5.6 billion. (The purchase is excluded from our data because the target company is based outside the US.)
Deals involving the relatively fragmented sub-sector of insurance brokers continued to dominate deal volume during the third quarter, making up 87% of total transactions.
In coming months, insurers probably will continue to sell capital-intensive, closed blocks, or underperforming businesses. Moreover, changes from the federal tax overhaul in January, including a reduction in the corporate tax rate, may spur deals during the fourth quarter and into 2019. Private equity firms are especially focused on the insurance sector, in part because of the reduced tax rate.