2020: Global Property-Casualty Insurance M&A in 2019 - Distribution Dominates



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The Conning study, “Global Property & Casualty Insurance M&A in 2019:  Distribution Dominates” tracks and analyzes U.S. and non-U.S. property and casualty mergers and acquisitions activity for insurers, distributors, and service-related firms. Specific transactions are detailed, and trends are analyzed across all segments.



  1.  Introduction

 2.  Executive Summary

 3.  Insurance M&A Market Overview

²     Overview

²     Key M&A Drivers in 2019

²     Key M&A Themes in 2019

²     2020 Outlook

 4.  Property-Casualty Insurance M&A

²     A Change in Direction

²     Valuations

²     Firming Insurance Market Conditions

²     Largest Property-Casualty Insurance Transactions of 2019

  5.  Themes in 2019 Property-Casualty M&A

²     Distress and Run-off

²     Private Equity/Financial Buyers

²     Reinsurance M&A Slowing Down

²     Lloyd’s—The Thinning of the Herd

²     Acquisitions by Mutual Insurers

²     Non-North America Property-Casualty M&A

²     Key M&A Drivers for 2020

  6.   Insurance Distribution M&A in 2019

²     Significant Insurance Distribution Transactions Announced in 2019

²     Private Equity Buyers

²     Bank Activity Downshifts to First Gear

²     Aggregators Keep on Aggregating

²     U.K.

²     O Canada

²     Valuations

²     Deal Count by Insurance Sector

²     MGAs and MGUs—Still a Hot Commodity

²     Outlook: Property-Casualty Distribution

  7.   Insurance Services M&A in 2019

²     Why Insurance Services?

²     Insurance Technology

²     Claims Adjusters/TPAs

²     Outlook for Services M&A

Appendix

Introduction

Key Takeaways

  • Merger and acquisition activity involving acquisitions of property-casualty insurers took a breather in 2019. There were 98 transactions globally involving the acquisition of a property-casualty insurer, with $16 billion in aggregate announced deal value, down from 104 transactions and $41 billion in aggregate value in 2018. The slowdown is attributed to a firming market, which favored organic over inorganic growth, and concerns regarding reserve inadequacy at potential targets.
  • Insurance distribution M&A, by contrast, was off the charts in 2019, with a record-setting 885 transactions announced, up from 747 in 2018. The main driver of the increase was exceptionally strong activity by private equity-owned aggregators such as Hub, BroadStreet, Assured Partners, and NFP. Private equity firms remain attracted to insurance distribution investments because of top- and bottom-line growth potential in the firming market. On March 9, 2020, Aon announced a blockbuster transaction agreeing to merge with Willis Towers Watson in a stock deal valuing Willis at $29.9 billion and the combined entity at approximately $80 billion.
  • Insurance services firms were actively targeted in 2019, with 101 transactions announced in the year. Close to half the targets are insurance technology or claims adjusting/TPA firms. The largest deal of the year was Aon’s acquisition of CoverWallet. Buyers included private equity firms, as well as existing insurance technology and claims adjusting firms.
  • Reinsurance M&A was subdued in 2019, as consolidation of most Bermuda and Lloyd’s reinsurers has already taken place, leaving few targets available for acquisition. However, in March 2020, France’s Covéa announced the acquisition of PartnerRe for $9 billion from Exor.
  • The run-off sector had an active year in 2019. Numerous insurers turned to run-off specialists such as Enstar, Catalina, and other firms, both established as well as new players, to offload their legacy liabilities with loss portfolio transfer, adverse development cover, and retroactive reinsurance arrangements.

This study, Conning’s 30th annual in-depth analysis of global insurance M&A (mergers and acquisitions), reviews insurance property-casualty M&A transactions announced in 2019 and early 2020 through early March. The analysis covers acquisitions of P&C insurers, insurance agents and brokers (including MGAs and program administrators), and insurance service providers. In prior editions of the Conning insurance M&A study, there was a volume on M&A involving property-casualty, life, and health insurers and a separate volume for insurance distribution and insurance services M&A. This year we cover property-casualty-related M&A (insurers, distributors, and service providers) in one volume and life and health insurance-related M&A in a separate volume.

Transactions covered include operating companies as well as selected reinsurance transactions involving acquisition of legacy business. The study also identifies salient drivers and themes in the M&A record. Changes in M&A drivers and themes reflect broader trends in the industry, at management teams, and at stakeholders.

M&A activity is a useful leading indicator of broader industry trends. It is, therefore, instructive for strategically minded planners at insurers, brokers, and for investors to follow developing M&A activity, dynamics, and themes for insights into market segments.

Our analysis is based on Conning’s global database of publicly announced transactions, supplemented by direct communication with acquirers whose acquisitions are not publicly announced.

  • Chapter 3 provides a broad overview of insurance M&A activity, drivers, and themes.
  • Chapters 4 and 5 focus on transactions and themes, respectively, in the 2019 property-casualty M&A record.
  • Chapter 6 focuses on insurance distribution M&A.
  • Chapter 7 focuses on insurance services M&A.