International insurance coverage M&A exercise drops in H1 2023 – Clyde & Co

The variety of insurance coverage mergers and acquisitions throughout the globe has plummeted within the first half of 2023, in response to world regulation agency Clyde & Co’s Insurance coverage Progress Report mid-year replace.

The report revealed that the variety of accomplished M&A offers within the world insurance coverage trade decreased from 242 accomplished offers within the first half of 2022 (H1 2022) and 207 within the second half of 2022 (H2 2022) to 171 within the first half of 2023 (H1 2023).

Among the many areas, the Americas had probably the most evident drop in insurance coverage M&A exercise, which noticed solely 79 accomplished offers in H1 2023 (down from 104 in H2 2002), with M&A within the area falling to its lowest degree since 2014.

Europe had solely 47 accomplished offers in H1 2023, the area’s lowest degree for over a decade. Asia Pacific’s accomplished offers totaled 29 in the identical interval however noticed a ramification of transactions throughout the area.

The Center East and Africa was the one area with an elevated variety of M&A exercise in H1 2023, with 9 accomplished offers in comparison with eight within the earlier six months.

What’s impacting M&A offers?

Clyde & Co’s report recognized diminishing urge for food in some areas for insurtech companies as one of many primary elements impacting the general drop in M&A transactions in H1 2023.

In Europe, discovering capital for insurtech companies was troublesome in H1 2023 because of the persevering with inflation and rising rates of interest. In the meantime, the US had an absence of “true insurtechs” getting into the market. Nevertheless, some areas’ curiosity in insurtech companies remained robust in H1 2023, together with Latin America and Asia.

“Non-public fairness corporations are taking a look at investing in a number of the Asia tech gamers across the area, in any respect levels of improvement, with potential capital suppliers evenly break up between worldwide PE corporations and regional asset managers. In the meantime, as the usage of AI in insurance coverage turns into higher established, funding is more likely to return to insurtech in different areas – because the sector best-placed to leverage the rising expertise,” mentioned Joyce Chan, accomplice at Clyde & Co in Hong Kong.

Eva-Maria Barbosa, accomplice at Clyde & Co in Munich, expects the lull in insurance coverage M&A to be short-lived.

“Regardless of ongoing geopolitical and financial uncertainty, insurance coverage companies are adopting a ‘Hold Calm and Carry On’ method. Carriers are much less depending on financial institution financing for strategic transactions as they’re restricted to leveraging a smaller proportion of the transaction anyway. With insurers usually steadiness sheet-heavy at current, the break in provider M&A exercise is more likely to be over. In the meantime, personal fairness capital is returning to the marketplace for dealer offers,” Barbosa mentioned.