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Insurance: US Deals 2023 midyear outlook
Insurance M&A remains resilient in a challenging deals environment
In contrast to the broader deals slowdown in other sectors, there was considerable insurance deal activity from late 2022 through early 2023. For the six-month period from mid-November 2022 to mid-May 2023, there were 194 announced transactions representing over $7 billion in deal value, compared to 263 announced transactions and $2 billion in deal value in the previous six-month period from mid-May 2022 to mid-November 2022. Lower value insurance brokerage transactions drove much of the decline in transaction volumes.
There have been three mega deals announced so far in 2023. In February 2023, Stone Point Capital LLC announced its 20% acquisition of Truist Insurance Holdings Inc. for $1.95 billion, demonstrating continued demand from private equity buyers for insurance distribution assets given their steady stream of cash flows. Additionally, Brookfield Reinsurance Ltd. announced a deal in February 2023 to acquire Argo Group International Holdings, Ltd. for $1.1 billion, which will add scale to Brookfield’s existing property and casualty (P&C) platform after its acquisition of American National Group Inc. acquisition last year. In May 2023, RenaissanceRe Holdings, Ltd. announced a $3 billion deal to acquire American International Group, Inc.’s treaty reinsurance business, including Validus Reinsurance Ltd, which will enable RenaissanceRe to scale its P&C reinsurance business and focus on underwriting, fee and investment income to drive profitability.
Deal activity in the life and annuity sector remained especially strong in 2023, driven by large reinsurance transactions (which are excluded from the above metrics). There were several notable reinsurance transactions announced in May 2023, including the Fortitude Reinsurance Company Ltd. / Lincoln National Life Insurance Company, Resolution Life US Holdings Inc. / Farmers New World Life Insurance Company, and MetLife Inc. / Global Atlantic Financial Group reinsurance agreements (reinsurer / reinsured, respectively).
“Despite uncertainty around interest rates and the US economic environment, we expect insurance deal activity to remain very active through the remainder of the year. We are seeing increased demand by private equity buyers seeking to acquire insurance brokerages, managing general agencies and blocks of life and annuity businesses.”
Integration insights for insurance
Many executives are trying to fundamentally reposition their businesses for ongoing success. Over the last three years, we’ve seen an increasing number of companies make large scale, transformational deals to acquire new markets, channels, products, operations and talent.
However, successful mergers and acquisitions — ones that meet strategic, operational and financial goals — are rare. Only 14% of respondents to our recent M&A Integration Survey noted this level of success.
On the plus side, survey results indicate that companies are beginning integration earlier and investing more to make transformational deals successful. But there’s plenty of room for improvement.
The survey report notes what separates the 14% from the rest: Successful organizations move from transaction to transformation over the long-term using a combination of M&A integration fundamentals, experience, investment and technology-enabled accelerators.
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