Insurance deals insights: Midyear 2020

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Robust insurance industry dealmaking collapsed in early 2020 with the advance of the COVID-19 pandemic, with deal volume from April until June plunging to the lowest level since the second quarter of 2013.

COVID-19 has compelled many insurers to shake up operations and business strategy, including adjusting to new ways of working and interacting. We expect M&A in the coming months to recover as companies use divestment to adapt to record-low interest rates and buyers with ample capital seek out new opportunities. The recovery may remain muted, however, as many dealmakers focus on their balance sheets and recessionary challenges.


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“Deal making declined in the first half of the year with the advance of the COVID-19 pandemic. Recent announcements, including those in July, could be a signal increased activity is right around the corner.”

John Marra, US Insurance Deals Leader

High level trends and highlights

  • The year began at a robust pace, with 168 deals announced during the first quarter totalling $35.5 billion in disclosed value. Three transactions were megadeals, accounting for $33.7 billion of the total during the period.
  • Damage to the economy from the COVID-19 pandemic undercut dealmaking during the second quarter. Disclosed deal value fell to $544 million,excluding the significant reinsurance transaction between Athene and Jackson National, with only 100 announced transactions. Most previously announced deals closed as planned during the quarter, with the exception of an agreement between SGAM Covéa and Exor’s PartnerRe — an apparent casualty of the sharp economic downturn.
  • During the first half of the year 89% of announced M&A volume involved insurance brokers. For several quarters, the subsector has been a focus for consolidation, fueled by the prospect of cost-cutting and greater efficiency from economies of scale.   

Highlights of deal activity


Other significant deals


  • Aon PLC in March announced its acquisition of Willis Towers Watson in an all-stock, $30.5-billion deal. The transaction — which is facing shareholder litigation and regulatory review — would create the largest global insurance broker.
  • Fidelity National Financial, Inc. (“FNF”), a title and real estate/mortgage settlement insurer, closed in June a $2.1-billion acquisition of FGL Holdings (“F&G”), a fixed indexed annuities and life insurance company. The deal will give FNF entry into an industry that is counter-cyclical to its title insurance business.
  • Thomas H. Lee Partners LP (“THL”) in January announced the acquisition of AmeriLife Group LLC, an insurance distributor, reportedly for more than $1 billion.

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Impact from COVID-19

  • SGAM Covéa in March announced the planned acquisition of PartnerRe business for $9 billion. In a sign of the pandemic’s disruption, the company cancelled the deal in May, citing “unprecedented conditions and significant uncertainties threatening the global economic outlook.”

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Additional dealmaking

  • Jackson National Life Insurance Co. announced a $27-billion reinsurance agreement with Athene Holding Ltd. involving Jackson’s traditional fixed annuity and indexed annuity liabilities. Athene is also investing $500 million for a 11% stake in Jackson.
  • Insurers raised capital at a higher pace during the second quarter. P&C carriers, reinsurers and private equity firms raised capital to take advantage of increasing insurance rates. The companies that announced capital raises included RenaissanceRe Holdings, Ltd., QBE Insurance Group Ltd., Hiscox Ltd and Beazley PLC. Enstar Group Ltd. announced a $630-million recapitalization of Starstone U.S. Holding, Inc., a specialty P&L insurer.
  • Prudential PLC in March announced plans for a minority IPO of Jackson, a subsidiary, to accelerate Jackson’s diversification. Lemonade, Inc., a digital P&C insurer that targets renter, condo and home insurance, announced during the second quarter a planned IPO of 11 million shares. Lemonade launched its IPO in July 2020 to strong investor interest.
  • Ryan Specialty Group, LLC, a wholesale insurance broker, announced a merger in June with All Risks, Ltd. in a deal said to be worth more than $1 billion. The merger expands Ryan Specialty Group’s footprint in insurance brokerage, where it generated nearly $12 billion in premium during the past fiscal year.

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Insurance deals outlook

We see several factors influencing dealmaking in the coming months:

Record-low interest rates. The Federal Reserve, seeking to spur a recovery, may hold down interest rates for an extended period. Low rates would crimp yields across the insurance industry, especially for life insurers and annuities that hold long-dated assets. Companies seeking to sustain shareholder value will probably explore alternative strategies, including M&A. Some insurers may consider divesting capital-heavy, long-tail blocks of business that they no longer see as core to their strategy.

Ample dry powder. Record levels of deployable capital among private equity and corporate buyers will likely fuel a rebound of M&A during the second half of 2020. The low interest rate environment is expected to attract new investors and capital looking for an initial entry into the insurance market.

Rising insurance rates. Expectations that rates will rise in property/casualty, reinsurance, and specialty lines will probably spur investment and drive M&A.

InsurTech. COVID-19 has changed the way policyholders interact with insurers, brokers, and agents, accelerating the need for digital solutions. After reassessing their internal capabilities, some companies may try to close any service or product gaps through dealmaking with InsurTech firms.

Risks from regulation/litigation. Insurance companies should consider closely watching regulatory and litigation trends inside and outside the US, especially regarding business interruption coverage. A French court during the second quarter ruled that AXA should compensate a restaurant for losses stemming from a government-mandated shutdown. Although the impact of the ruling on US-based insurers is not clear, the stakes are big. Business interruption policies are a leading source of revenue for many U.S.-based insurers.

Opportunities to buy distressed companies may emerge as the full impact of the pandemic becomes clear. We expect that private equity and corporate buyers will be on the watch for assets selling at compelling prices.

Good beginning. M&A got off to a strong start for the third quarter. Allstate Corp. has already announced plans to buy National General Holdings Corp. for $4 billion in cash, and KKR & Co. said it plans to buy Global Atlantic Financial Group, Ltd., for $4.4 billion.

About the data

We define M&A activity as mergers and acquisitions in which targets are US or Bermuda-based insurance companies acquired by US or Bermuda-based insurance companies. In addition, we have highlighted some significant transactions for companies domiciled in the Cayman Islands and United Kingdom that have a significant U.S. presence. We define megadeals as transactions with deal value greater than $1 billion. We define divestitures as the sale of a portion of a company (not a whole entity) by a US-based seller. We have based our findings on data provided by industry-recognized sources. Specifically, values and volumes used throughout this report are based on announcement date for transactions with a disclosed deal value, as provided by Capital IQ, as of June 30, 2020, and supplemented by additional independent research.

Information related to previous periods is updated periodically based on new data collected by Capital IQ for deals closed during previous periods but not reflected in previous data sets. Deal information was sourced from Capital IQ and includes deals for which buyers or targets fall into one of the insurance industry sub-sectors: life & health, property & casualty, insurance brokers, InsurTech, or other (such as title, financial guaranty or multiline insurance). Certain adjustments have been made to the information to correct for transactions which our data sources classify as financial services but which we assign to technology and other sectors, or vice versa.

Contact us

John Marra

John Marra

Insurance Deals Leader, PwC US

Gregory McGahan

Gregory McGahan

Financial Services Deals Leader, PwC US

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