The slowdown follows a year of declining deal volumes in 2023, spurred by rising inflation and interest rate adjustments. Cash-rich carriers, which would typically drive market activity, are holding onto capital due to high interest rates, further stalling global deal momentum.
Sellers’ high pricing expectations and the increasing cost of integrating modern technology with outdated platforms have also slowed the pace of deals. Additionally, talent acquisition has become a more prominent factor in M&A negotiations. However, Clyde & Co’s report indicates that the second half of 2024 may see a resurgence in activity.
Eva-Maria Barbosa, Partner at Clyde & Co, commented on the potential future of M&A, stating: “For the remainder of 2024 and into 2025, we expect M&A activity to be driven by larger transactions. While the number of deals may not increase dramatically, we anticipate seeing more deals that span multiple jurisdictions, with major carriers looking to acquire businesses across 8-10 countries in one transaction.”
Peter Hodgins, also a Partner at Clyde & Co, added: “As we approach the US election, we are near the end of a period of significant political upheaval. Interest rates are on a downward trend, and we expect acquirers to become more aggressive, while sellers may face fewer options. Businesses that have relied on financing will look to offload non-core or underperforming operations.”
Regional Highlights
- UK: M&A activity remained low but speculation is rising about a potential increase in larger-scale deals, particularly with UK-listed carriers being viewed as potential takeover targets by foreign buyers due to strong performance and low valuations.
- Europe: Although deal activity has been slow, lower interest rates and increased political stability, coupled with the EU’s mobility directive, could catalyse cross-border transactions.
- US and Canada: The region led in underwriting deals, with 40 transactions completed. Brookfield Reinsurance’s acquisition of American Equity Investment Life (AEL) for $3.587bn was the largest deal globally. However, the North American market remains subdued overall.
- Middle East: The region has seen continued consolidation, with local carriers expanding to capture growth. While some global insurers are scaling back, specialty carriers are entering the market, focusing on lines like reinsurance and trade credit.
- APAC: The M&A market has shown resilience in 2024, with several large cross-border deals. Japanese carriers, in particular, have been expanding their presence across the region.
- South Africa: The global M&A slowdown has hit South Africa, where high inflation, interest rates, and political uncertainty have created a challenging environment for deals.
- South America: HDI’s acquisition of Liberty Seguros in Chile, Colombia, and Ecuador follows its takeover of Liberty’s Brazilian operations, strengthening its presence across the continent.
In the property and casualty (P&C) space, interest in specialty carriers is growing as data and technological integration play a more critical role in deal negotiations. Despite current challenges, conditions appear to be improving, though any revival will likely be uneven across regions.
