Insurance M&A worldwide at lowest point in 16 years, predicted to bounce back in 2025.
Global insurance carrier mergers and acquisitions (M&A) hit a 16-year low in 2024 due to factors such as high interest rates, geopolitical instability, and increased regulatory oversight, which dampened the appetite for deals among carriers. According to Clyde & Co’s annual Insurance Growth Report, only 204 transactions were completed in 2024, a significant decrease from the 346 deals in the previous year, marking the lowest total since the report’s initiation in 2009.
While traditional M&A activity remained subdued in 2024, the global Managing General Agent (MGA) sector saw substantial growth as carriers in the US, Europe, and the Middle East directed capital towards this segment. Despite the downturn in dealmaking in 2024, a resurgence is anticipated in 2025, particularly in the US. The restored investor confidence in the US, driven by the government’s interest in deregulation and a more favorable cost of capital, is expected to fuel activity both domestically and internationally.
Forecasts suggest that foreign interest in the US Excess & Surplus market will increase, while US carriers, leveraging a robust dollar, will likely pursue undervalued assets in Europe and other regions. As the insurance industry grapples with the implications of new technologies like Artificial Intelligence (AI), Clyde & Co predicts that technology considerations, including cyber resilience, will drive dealmaking in 2025.
An evolving global regulatory landscape is anticipated to both facilitate and impede M&A transactions in 2025, while the prominence of MGAs is projected to continue growing. Regional consolidation, especially in markets like the Middle East, is expected to persist, and a softening global rate environment will likely encourage specialty deals. Eva-Maria Barbosa, a Partner at Clyde & Co, highlighted the challenges facing dealmaking in 2025, citing a range of evolving risks as a fuel for the growth of MGAs globally. While this trend is expected to continue, traditional M&A could also see a revival, primarily in the US, where a deregulated economy is likely to spark new activity on a global scale.
Barbosa noted that the pipeline of deals already outlined for the first half of 2025 is robust, indicating a potential rebound in dealmaking in the coming year. In summary, despite the obstacles faced by the insurance industry in 2024, the outlook for 2025 is cautiously optimistic given the shift towards technology-driven dealmaking, regulatory challenges, and the resilience of key sectors like MGAs and specialty markets.
