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RAPPORT

2018 Insurance M&A Outlook

An continuous active insurance marketplace

A changing landscape:The 2018 outlook anticipates that M&A deal volume and value will remain generally consistent with what we’ve experienced since 2011 (with the exception of 2015) and be comprised primarily of smaller transactions valued at less than $2 billion.However, it must be noted that some bigger deals are expected as well. 

The insurance M&A marketplace is expected to evolve in a number of ways:  

  • L&H growth: L&H businesses should continue to grow through acquisition, as lagging consumer demand for life insurance and annuity products continues to inhibit organic growth.
  • P&C impact: Due to of organic growth, M&A will continue in the P&C subsector with small-to medium-size specialty carriers.
  • Uncertainty in reinsurance: The reinsurance market, which has been dealing with persistently soft rates for almost a decade, faces significant uncertainty on whether it can secure notable rate increases in 2018.Increase in run-off transactions
  • Managing general agents (MGA): Brokers interested in alternative distribution opportunities may look to acquire digital MGAs in 2018.
  • insurtech investment: Pressure will continue to build on insurance companies to invest in InsurTech, either by acquiring a technology startup, becoming a minority owner.
  • Change at the top: The global insurance industry has experienced a lot of change at the top in the last 18 months or so. Multiple globally prominent insurers have announced new global and/or regional CEOs.

Drivers and trends for 2018

Insurance company executives contemplating M&A in 2018 - whether that means selling, buying, or partnering - should consider planning for and addressing seven trends that are evolving the insurance M&A market over time and and may either help or hinder their ability to execute on their plans:

  • Modularization of the insurance value chain
  • Tax reform and regulatory policy
  • Valuations
  • Emergence of new buyer types
  • Continued demand by foreign buyers to invest in the US market
  • InsurTech: Buy, invest, or partner?
  • Divesting noncore business 
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