Insurance industry mergers and acquisitions see significant increase in value despite decrease in number of deals in 2024.
Insurance M&A activities are expected to see significant growth in 2025, with the majority of insurers anticipating a rise in deal closures compared to 2024, where there were fewer transactions but higher total deal values. Deloitte’s analysis highlights a decline in merger and acquisition activity in the U.S. and Bermuda insurance industries during 2024, with a decrease in deal counts across all sectors. Despite the fewer number of transactions, the aggregate deal values surged by 72% to $49.4 billion, primarily driven by transformative deals.
The Life and Annuity (L&A) sector experienced a notable decline in transactions, dropping by 35% from 17 deals in 2023 to 11 deals in 2024. However, the aggregate deal value saw a significant increase of 92% to $11.1 billion, largely influenced by Nippon’s $8.2 billion acquisition, valuing Resolution Life at $10.6 billion. Excluding this major transaction, the sector’s total deal value still surpassed the previous year’s value.
Property and Casualty (P&C) deals also witnessed a decrease in the number of transactions by 9%, totaling 32 deals in 2024. Despite this decline, the aggregate value rose by 54% to $6.7 billion, with Bermuda-based Enstar Group’s transaction being a significant contributing factor. The insurance brokerage sector remained the most active area for mergers and acquisitions, with 476 deals in 2024, showcasing a dramatic increase in average deal value to $2.1 billion.
There were key market dynamics observed in the insurance M&A landscape in 2024, with private equity participation decreasing from 70% to 50% in 2023 and 2024. Deal completion timelines also extended, creating market uncertainty, while anticipated mergers were smaller in scope, impacting market expectations. In the broader economic context, a rising stock market and declining inflation influenced the favorable conditions for equity-based transactions.
2025 trends in insurance M&A suggest a rise in deal activity, with 90% of insurers anticipating more closures and restructuring. Climate risk concerns are driving sustainability-focused acquisitions, especially in the L&A and P&C sectors targeting foreign entities. The expiration of provisions of the Tax Cuts and Jobs Act (TCJA) in 2025 creates both uncertainty and opportunity for strategic dealmaking. Insurtech companies may become attractive acquisition targets for innovation and modernization in the evolving global tax environment.
In conclusion, the insurance industry is poised for increased merger and acquisition activity in 2025, with trends indicating a positive outlook for deal closures, restructuring, and strategic acquisitions. The evolving economic and political landscape presents challenges and opportunities for insurers to navigate changing market dynamics and capitalize on emerging trends in a rapidly evolving industry.
