Global insurance mergers and acquisitions shrank 23% to 346 last year from 449 in 2022 amid heightened geopolitical risks and high inflation, according to Clyde & Co., a UK law firm that handles deals in the sector.
The Asia Pacific region was the least affected with M&As down 13.3% to 52. The Middle East and Africa region was the hardest hit with deals slumping 37.5% to 15.
According to Peter Hodgins, a Clyde & Co. partner, insurers are finding it a challenge to get financing for M&As as the global economy continues to feel the impact of high inflation.
“With over half of the global population expected to be called to the polls in 2024, as well as a number of escalating regional conflicts, heightened geopolitical risks have become a persistent concern,” he says. “In the face of this market uncertainty, dealmakers have remained in wait-and-see mode, with a negative impact on overall transaction volume in 2023.”
However, Clyde & Co. believes deal activity has bottomed out and will start to increase through 2024, with Europe leading the way.
“In the face of macroeconomic and geopolitical uncertainty insurers are increasingly viewing the current trading environment as ‘the new normal’ and we expect them to become less cautious with regards to mergers and acquisitions over the coming 12 months,” Hodgins says.
