"A variety of factors are driving deals," the firm stated in its report. "Private equity (PE) firms and asset managers are still interested in entering the insurance market or expanding their existing footprints."
As insurtech valuations fall, acquisitions become more appealing to both private equity investors and traditional carriers looking to expand their technological capabilities. Rising interest rates also promise better investment returns for long-term businesses while assisting insurers in rebalancing portfolios."
According to the report, the industry experienced an increase in "mega-deals," with 13 transactions valued at more than $1 billion in the first half. The Americas were home to many (132) of the first half's 242 mergers and acquisitions, including the largest, a $7.7 billion merger between Apollo Global Management and Athene Holdings Ltd.
Clyde & Co. observed continued market optimism, with many property/casualty insurers looking to acquire businesses to boost premium income or improve services.
"Among those companies that are still considering M&A as a means of preparing for transformation, the deals will be driven by business strategy." "For example, buying a technology service provider or acquiring competitors with better distribution infrastructure or technological capability," said Joyce Chan, a partner in Clyde & Co.'s Hong Kong office.
According to the report, there is "no shortage of capital" for M&A for private equity firms, particularly in the broker sector.
Although cyber has become both a "opportunity and a threat" for the insurance industry as risks evolve, private equity remains interested in investing in the field.
"Those insurers that are not doing cyber on a large scale will be shying away because the size of their portfolios makes it unsustainable with the number of larger claims coming in," Eva-Maria Barbosa, partner in the Munich office, said. "This is good news for the larger players, as they will almost certainly get rate increases at renewals."