Current Status of Mergers and Acquisitions in the Insurance Sector
In the ever-changing world of global finance, the year 2024 saw a significant shift in the insurance sector. According to the annual insurance Growth Report by Clyde & Co, mergers and acquisitions (M&A) activity among insurance carriers reached a 16-year low, with only 204 transactions completed worldwide.
This downturn was primarily due to persistent macroeconomic challenges, such as geopolitical instability, inflationary pressures, tough economic conditions, and regulatory uncertainties. These factors made carriers cautious about engaging in major deals. High valuations further discouraged large transactions, and interest from private equity bidders declined, leading carriers to focus more on smaller bolt-on acquisitions, share repurchases, and internal capital deployment rather than large-scale M&A.
The report noted that this reticence was compounded by a preference for domestic consolidation over cross-border deals. Examples of this trend included small-scale tie-ups in Bermuda and selective acquisitions mainly in the U.S., such as Sentry Insurance’s $1.7 billion purchase of The General and Markel’s acquisition of UK marine MGA MECO.
Peter Hodgins, Partner and Global Head of Corporate Insurance, expects higher activity in the second half of the year due to pent-up demand from carriers looking for strategic growth. However, the mid-year Growth report update in 2024 highlighted the lowest number of deals in the insurance carrier M&A landscape.
The first six months of 2024 saw the insurance carrier M&A landscape see the lowest number of deals (103) completed in 15 years. This downturn was also evident in the second half of 2022, with 207 deals, and in the first half of 2025, where deal activity fell to its lowest level since the financial crisis of 2008, with only 95 deals completed.
The MGA market continues to attract interest, as shown by Markel’s acquisition of the UK’s MECO, a specialist marine MGA. Meanwhile, North America posted the largest number of deals completed in the period at 35.
The findings from Clyde & Co's annual insurance Growth Report in 2024 reveal that insurers pressed the pause button on dealmaking amidst a wave of uncertainty and volatility. This cautious approach was fueled by ongoing geopolitical uncertainty, inflationary concerns, wider economic turbulence, and stubbornly high valuations.
Despite the low M&A activity, there were notable deals completed during this period. Sentry Insurance completed a significant deal, acquiring The General from American Family insurance for $1.7bn. Zurich also announced the acquisition of AIG's Global Personal Travel Insurance and Assistance business for $600m, a deal expected to close in the second half of 2025.
As we move into the second half of 2025, there is hope for a rebound in M&A activity. Carriers, having retained their war chests, may begin to selectively pursue larger deals, as the economic landscape stabilises and valuations become more favourable.
- In light of the cautious approach taken by insurers, investors may want to consider opportunities in the business sector that offer potential growth in alternative financial arenas, such as events or technology, during this period of low mergers and acquisitions (M&A) activity in the insurance industry.
- Despite the ongoing financial challenges, the future of the insurance sector appears promising as several investments, like strategic acquisitions or bolt-on purchases, could potentially increase in number as insurers begin to aggressively seek growth opportunities in the second half of 2025, once the economic landscape stabilizes and valuations become more favorable.
