Insurance Sector M&A Deal Value Increases 183 Percent Year over Year

In a graph for 2018 a hand draws a wavy line to mark the growth of 5 bars in a graph finally extending up and out as an arrow

July 30, 2018

In a graph for 2018 a hand draws a wavy line to mark the growth of 5 bars in a graph finally extending up and out as an arrow

According to a recent PwC report, the mergers and acquisitions (M&A) deal value in the insurance sector practically tripled during the first half of 2018 compared with the same period in 2017. The report attributes the heightened value to mega-deals and federal tax reform effects, saying that the results of tax reform may continue to fuel activity in the coming months as reform effects crystallize.

The report said that the total deal value increased 183 percent, while the total volume decreased 18 percent in the first half of this year compared with the same period in 2017. Compared to $10.1 billion during the first half of 2017, the US insurance sector announced that deal value hit $28.6 billion in the first half of 2018.

The report attributed this to two acquisition announcements, which included the AXA/XL Group acquisition announcement for $15.4 billion and the AIG/Validus acquisition announcement for $5.6 billion.

The report found 247 announced deals in the insurance sector with a revealed value of $28.6 billion at the end of 2018's second quarter. Of the announced deals, the report said 5 exceeded a value of $1 billion compared to 7 such transactions for the entirety of 2017.

Of the announced deal volume, 87 percent came from broker deals.

The report also said, "Insurers are also expected to continue to divest capital-intensive, closed blocks or underperforming businesses. Private equity will no doubt continue to pursue US insurance sector assets, which now may be even more attractive due to a lower corporate tax rate."

Download a complimentary copy of the report, PwC Deals US Financial Services Deals Insights Q2 2018: Trends and highlights from the asset and wealth management, banking and capital markets, and insurance industries, on the PwC website.

July 30, 2018