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Insurance: Deals 2022 outlook

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What's driving deals in 2022

PwC's Deals Sector Leader John Potter and other partners discuss the deals outlook for 2022.

Insurance dealmaking accelerates

Insurance deal activity accelerated in the second half of the year, as private equity, asset managers and corporate interest in the sector remained high. From the end of June to mid-November, there were 249 announced transactions, with $34.2 billion in announced deal value, including seven megadeals.

Insurance brokerage transactions drove the majority of announced M&A activity, continuing the distributor consolidation trend. Private equity remained active in the life and annuity insurance space, with Carlyle’s FortitudeRe and Brookfield Asset Management both announcing megadeals in the second half of the year.

Standout megadeals included Covéa Mutual Group Insurance Company’s announced acquisition of PartnerRe Ltd. for $9 billion, Chubb’s announced acquisition of Cigna’s life, accident and supplemental benefits business in the Asia Pacific region and Turkey for $5.8 billion, and Brookfield Asset Management’s announced acquisition of American National Group, Inc. for $5.1 billion.


Robust competition projected

We expect strong insurance M&A activity to continue in 2022. Many corporate clients and private equity firms are looking for opportunities to expand their foothold in the insurance market and many asset managers are looking to enter it. Considering the record levels of deployable capital, we expect competition for insurance carrier targets and run-off blocks to remain strong, ongoing brokerage consolidation to continue apace, and interest in InsurTechs to remain high.

The second half of 2021 saw significant corporate dealmaking in the sector. A highlight was Great-West Life & Annuity Insurance Company’s announced acquisition of Prudential’s full service retirement business for $3.6 billion and Chubb’s announced acquisition of Cigna’s life, accident and supplemental benefits business in Asia Pacific and Turkey for $5.8 billion. In addition, Covéa re-announced their aforementioned deal with PartnerRe, which was initially halted due to the pandemic, with the two companies signing a letter of intent to complete the transaction.

As large brokerage aggregators seek economies of scale, we also expect to see continuing consolidation in the insurance brokerage space drive deal volume. This consolidation has led to high multiples for insurance brokerage targets and shows no signs of stopping. However, the market is facing headwinds from increased regulatory scrutiny, a notable example of which was the termination of the Aon and Willis Towers Watson merger, which ultimately collapsed under pressure from the US Department of Justice in the summer of 2021. However, the unsuccessful merger did not deter Willis from moving forward with the sale of their WillisRe operations to Arthur J. Gallagher for $4 billion, which is expected to close in the fourth quarter.


“The insurance deals market continued to be very active in the second half of 2021 and we expect that trend to continue into 2022, led by private equity backed platforms aggressively consolidating life and annuity blocks.”

— Mark Friedman, PwC Insurance Deals Leader

Key deal drivers

Optimizing portfolios and divesting to reinvest

We continue to see insurance carriers look for opportunities to divest non-core assets in order to free up capital and refocus their efforts on core competencies. Willing private equity and asset managers who are looking to cost effectively increase assets under management are meeting this sell-side activity. (An increase in assets under management offers private equity and asset managers opportunities to generate better risk-adjusted returns on assets and increase fee income.)

In a major deal, Carlyle Group’s FortitudeRe announced in September its acquisition of Prudential’s Annuity Life Assurance Corporation for $1.5 billion. The transaction allows Prudential to divest a portion of its in-force legacy variable annuity block and Carlyle to acquire a $31 billion block of business. In addition, Venerable recently announced a transaction with Manulife Financial Corporation to reinsure about $22 billion of variable annuities issued by John Hancock.

Committing capital to growth

Significant amounts of deployable capital remain available, with both corporate and private equity clients looking for investment opportunities. The competition for available assets has led to high multiples across the industry, both for carriers and brokerage targets. The increased interest in the sector means target companies have several kinds of potential buyers, both corporate and private equity.

Highlights in 2021 were Prudential’s sale of its full services retirement business to Great-Life and Global Atlantic’s announcement of an $8 billion annuity reinsurance transaction with Ameriprise Financial, which primarily comprises fixed-rate and income annuities. 

InsurTech struggles could be incumbents’ gains

In the first half of 2021, we saw significant IPO and special purpose acquisition company (SPAC) activity in the InsurTech industry. However, enthusiasm in the InsurTech space abated in the second half of 2021 because many of the IPOs lagged behind the S&P. Lemonade Inc. has been a notable exception. It has performed well and recently announced the acquisition of Metromile Inc, a pay-per-mile car insurance company that went public via a SPAC in February 2021 but experienced a significant decline in its stock price over the year (down about 70% from its IPO price by November 2021). Lemonade leveraged its increased stock price to acquire Metromile in an all-stock transaction in which Metromile shareholders will receive Lemonade common shares at a ratio of 19 to 1.

The lagging InsurTech space is highlighting the difficulty some of these companies have had generating the kind of operating profits that justified the high market cap that their underlying technology and data-collection afforded them. We expect insurance carriers will view these lagging InsurTechs as potential targets that can help them expand their technological capabilities at a discount.

Navigating policy uncertainty

We’ve recently seen several global efforts to reform tax rules, including:

  • The autumn 2021 Organisation for Economic Co-operation and Development (OECD) inclusive framework agreement.
  • Expected late-2021 model language and an EU directive to implement Pillar II of the OECD base erosion and profit shifting (BEPS) project, which would impose a global minimum tax, as well as a limitation on certain intercompany payments to low tax jurisdictions. Changes to the US Base Erosion and Anti-Abuse Tax (BEAT) regime could also impact these transactions.
  • US lawmakers’ attempts to enact tax code changes by the end of 2021. (Current draft legislation includes a number of deferred effective dates.)

In addition to changes in taxation, the active insurance deal market may face regulatory headwinds from a more interventionist US Congress and executive branch . Moreover, there’s also uncertainty about market fluctuations if interest rates increase and the effects of inflation. Higher interest rates could result in carrier portfolios being more attractive to buyers.

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Mark Friedman

PwC Insurance Deals Leader, PwC US

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