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November 1, 2018

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Global insurance M&A bounces back

Global insurance mergers and acquisitions rose to 37 billion euros (US$41.9 billion) in the first six months of 2018, with a host of mega deals resulting in the highest first-half total since the financial crisis, a report by Willis Towers Watson and Mergermarket showed.

The first half saw 14 insurance deals worth over 500 million euros, but total volume fell to 84 deals, the lowest number since 2009.

The report cited the changing nature of business models as a driver for deals, with regulatory pressures leading to new models and more firms trying to return to their core strategy.

It also said companies are divesting unwanted parts of their business, putting valuable assets on the market again.

For private equity investors, record levels of inflow, with cash reserves reaching US$1 trillion in 2017, has driven interest in insurance assets, leading to complex acquisitions from these buyers in 2018.

Private equity firm Bain Capital agreed to buy esure for 1.21 billion pounds (US$1.5 billion) in August, ending over two years of speculation around the British insurer being a takeover target for US private equity firms.

Regulatory change has played a big role in the US, as tax reform has provided an immediate boost to company earnings since the turn of the year.

“Debt continues to be cheap, and following the recent tax reforms, US companies have been given a steroid kick. We will continue to see an active M&A market,” Willis Towers Watson Managing Director Jack Gibson said.


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