We hear and read that merger and acquisition (M&A) activity in the property/casualty insurance industry is fading. Without a doubt, it isn’t what it used to be. Deal transaction volume and values are down in 2014 and aren’t expected to surpass recent or earlier levels. But despite the market chatter, we’ve seen considerable activity so far this year, which we expect to continue in the months ahead.
Executive Summary
M&A activity in the insurance industry is alive and well in spite of changes in recent years, says Sean McDermott of Towers Watson. Though deals today are smaller and fewer in number, many active players continue to see M&As as attractive vehicles for growth, geographic expansion and the acquisition of new customers.Today, demand (the number of potential buyers) exceeds supply (the number of potential sellers) by a factor of three to one. Traditional and nontraditional acquirers in the industry are reviewing potential deals that offer opportunities to expand into new lines of business, customer segments and geographies. After assessing an opportunity, many potential acquirers quickly move on and never transact. Others move forward with management discussions, but few get to the due diligence phase. The high level of interest among acquirers tells us that P/C M&A is actually alive and well—though different from the past.
