More catalysts ahead for resilient insurance M&A activity – New S&P Outlook Report
Q3 2020 hedge fund letters, conferences and more
COVID-19 delayed deal-making across the insurance sector, but it did not derail activity. The pandemic and related fallout may even provide new urgency for M&A as prospective buyers face new impediments to top-line growth and prospective sellers reevaluate strategic priorities or struggle to cope with the financial and operational realities of the current environment.
According to S&P Global Market Intelligence’s newly released insurance M&A outlook report, it projects that aggregate full-year 2020 deal value for insurance carrier transactions involving buyers and/or targets in the U.S. and/or Bermuda, following a resurgence of activity in the third quarter, will slightly exceed the 2019 tally.
Notable highlights from the S&P Global Market Intelligence’s analysis include:
- US/Bermuda P&C and life insurance carrier M&A is on pace in 2020 to exceed the 2019 total as measured by combined deal value.
- COVID-19 may accelerate the push for consolidation as factors such as ultra-low interest rates and operational/logistical challenges place increasing emphasis on operational efficiencies.
- Buyers and sellers will continue to use nontraditional structures that may not technically qualify as M&A activity to transform their business models and balance sheets.
- Post-election concerns regarding tax policy may lead to a race to the finish line in the US broker/agency space. While the number of deals in that sector fell by about 15% through the first nine months of 2020, a Democratic sweep of the legislative and executive branches on Nov. 3 could lead to a surge of activity through the balance of the year.
Tim Zawacki, our lead insurance analyst will be presenting more on this at S&P Global Market Intelligence’s annual Insurance M&A Virtual Summit held next Thursday, November 12. To request a complimentary press access pass, please reach out to myself at amanda.oey@spglobal.com.
In addition, Tim is available for interviews and the full report is available here: https://www.spglobal.com/marketintelligence/en/news-insights/research/more-catalysts-ahead-for-resilient-insurance-ma-activity
Thank you in advance for citing S&P Global Market Intelligence, should you choose to use any of this information in your reporting.
Article by S&P Global Market Intelligence
