Conning Research: Insurance Mergers & Acquisitions Up in 2011

March 31, 2012

Insurance mergers and acquisitions in the U.S. continued to gain momentum in 2011, with a focus on strategic transactions. Transactions increased in every market segment, including property casualty, life and annuity, health, distribution and service firms, according to a new study by Conning Research & Consulting.

“Mergers and acquisition activity in the U.S. insurance market rose again in 2011, with a 36 percent pickup in transactions and an 18 percent increase in deal values,” said Jerry Theodorou, analyst at Conning Research & Consulting. “In a low interest rate environment, the combination of continuing post-financial crisis economic growth, increased pressure for more regulatory capital, rising company valuations, and soft market conditions all favored increased mergers and acquisitions activity. Many companies actively sought strategic M&A solutions, bolt-on additions, or lines of business that could provide a growth solution. Bolstered by rising company valuations, sellers were also increasingly motivated to sell, as the bid-ask spread narrowed.”

The Conning Research study, “Global Insurance Mergers & Acquisitions in 2011: A Shift to Strategic Transactions ” tracks and analyzes both U.S. and non-U.S. insurance industry M&A activity across property-casualty, life-annuity, health insurance and distribution and services sectors.

“Strategic plays dominated the insurance mergers and acquisitions market in 2011,” said Stephan Christiansen, director of research at Conning. “Transactions involving mutual insurers more than doubled in 2011, as they sought merger or affiliation solutions to the damaging impact of heavy natural catastrophe losses and other challenges. We also saw a sharp increase in vertical integration driven transactions, where insurers acquired managing general agents and other distribution solutions to support growing specialty lines of business. At the same time, private equity-backed transactions rose dramatically, with particular focus on distribution and services sectors.”

Source: Conning Research & Consulting

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