The first half of 2024 set a 15-year low for first-half insurance carrier mergers and acquisitions, according to Clyde & Co’s latest Mid-Year Growth Report.

The number of insurance carrier M&A transactions completed in the first six months of this year dropped to 103 — a 40 percent decrease from the 171 made in the first half of 2023.

In the report, Clyde & Co said that the first-half 2024 number was “significantly lower” than the previous low point of 162 during the first half of 2023.

“The combination of high interest rates, stubborn inflation, high borrowing costs and geopolitical uncertainty has seen 2024 continue very much in the same vein as 2023,” the report said. “From a global perspective, caution abounds. Potential acquirers are more selective, keen to avoid buyer’s remorse by ensuring cultural and strategic fit, while sellers are holding out for better prices in more favorable circumstances.”

Per a press release, deal volumes declined throughout 2023 in response to a surge in inflation and interest rate cuts. In the first half of 2024, “cash-rich carriers, which would traditionally have been active in the market, have been retaining capital while interest rates are high,” the release said.

Clyde & Co reported that high pricing expectations and increasing premium required for tech system integration as innovation widens the gap with outdated platforms are contributing to the slowdown, and deal dynamics are also changing with a greater emphasis placed on securing talent.

While the U.S. and Canada saw the highest number of insurance underwriting deals of any region in the first half of 2024 with a total of 40 transactions closed, by its own standards, M&A activity in North America “remains muted,” the report said.

According to the report, the November election will be a “watershed moment,” and after it passes, “deal flow may resume again.” Clyde & Co also noted that a more settled economic picture, with interest rate and inflation pressures abating, could provide further deal stimulus.

“Insurance M&A, for the remainder of 2024 and into 2025, will likely be driven by larger scale transactions,” said Eva-Maria Barbosa, a partner at Clyde & Co. “While the total number may not increase dramatically, we are increasingly likely to see deals that span a number of jurisdictions with some of the major carriers now looking to take on books or businesses which span 8-10 countries in one swoop.”

Peter Hodgins, also a partner at Clyde & Co, added that the U.S. election will “bring us near the end of a period of exceptional political change.” He said that interest rates are broadly tracking downwards, and while acquirers are “likely to become more bullish, sellers may be running out of road,” and businesses that have relied on financing will look to divest non-core businesses or underperforming operations.