After a stand-out 2019, where global insurance M&A reached a four-year high, transaction numbers in 2020 held steady with only a slight dip on the previous year. Europe was hardest hit with activity down by a third, continuing a two-year slide. However, this was offset by an uptick in M&A in the Americas and notably in the Middle East and Africa, albeit from a low base. Activity in Asia Pacific remained broadly flat.
Investor sentiment will remain robust
Deal-makers in the insurance industry, like many others, paused for reflection in the first half of 2020, but not for long. With governments expected to continue to spend heavily to support the recovery of economies around the world, business and consumer spending is forecast to come racing back in the second half of 2021, bringing opportunities for insurers.
The technology imperative is now indisputable
The shift to remote working forced by the pandemic has accelerated the adoption of technology across the insurance industry. Technology will continue to be a key feature of the growth agenda in the coming year as re/insurers seek out insurtech providers that can deliver a competitive edge, be it through acquisition, investment or partnership.
Capital is abundant
Increasing premium rates and a more optimistic outlook for most lines of business will make stronger market players more likely to look for growth opportunities through acquisitions, some of which may have been put on hold in 2020 due to the pandemic.
Targets are plentiful
For those on the acquisition trail, there will be no shortage of targets in 2021. The pandemic has forced insurance businesses to review their strategies and get laser-focused on products and markets, whilst smaller insurers in particular may struggle to cope with the ongoing pressures of COVID-19 and be forced to put themselves up for sale.
Scrutiny is intensifying
While deal-makers are on the front foot and actively looking for acquisitions, most are doing so with a more heightened sense of caution than in the past, and the viability and profitability of potential targets are receiving increasingly intense scrutiny.