Overview of 2024 Insurance M&A Activity
The landscape of global insurance mergers and acquisitions (M&A) faced a significant downturn in 2024, reaching its lowest point since 2009 according to Clyde & Co’s annual Insurance Growth Report. The year recorded only 204 completed transactions, a steep decline from the 346 deals finalized in the previous year.
Factors Contributing to the Decline
Several factors contributed to this reduction, including high interest rates, geopolitical instability, and increased regulatory oversight, all of which tempered carriers’ enthusiasm for dealmaking.
Growth in the MGA Sector
Despite the overall slump in traditional M&A, the Managing General Agent (MGA) sector experienced growth. Carriers across the US, Europe, and the Middle East continued to invest in the MGA space, leveraging it as a strategic opportunity amidst uncertain market conditions.
Predictions for 2025
The outlook for 2025 appears more promising, with a projected rebound in M&A activity, particularly in the United States. Investor confidence is expected to recover, encouraged by government deregulation efforts and a more favorable capital cost environment.
Furthermore, there is an anticipated increase in foreign interest in the US Excess & Surplus market. US carriers, bolstered by the strength of the dollar, may actively pursue underpriced assets in European and other international markets.
Technological and Regulatory Influences
Technological advancements, including AI and cyber resilience, are expected to drive dealmaking in 2025. However, the increasingly complex global regulatory landscape might both stimulate and hinder M&A activities.
Continued Rise of MGAs and Regional Trends
The MGA sector is likely to continue its upward trajectory. Additionally, regional consolidation, particularly in the Middle East, is projected to endure. A softening global rate environment could also spur specialty deals.
According to Eva-Maria Barbosa, Partner at Clyde & Co, “With many of the challenges that characterized 2024 persisting, dealmaking will be tough in 2025 as businesses grapple with a plethora of evolving risks. This is fueling the growth of MGAs globally as they offer an appealing avenue to establishing footholds in uncertain markets and industries. While we can expect this trend to continue, traditional dealmaking could be rekindled too, particularly in the US where a deregulated economy is likely to prompt new activity around the world. The pipeline of deals already mooted in the first half of 2025 is very strong.”
