Global insurance industry saw significant increases in distribution, M&A in 2015, Conning says

The global insurance industry saw significant increases in both insurance distribution and insurance services mergers and acquisitions in 2015, according to a new report.

Global Insurance Distribution & Services Sector Mergers & Acquisitions: Building for the Future was released on Tuesday by Conning Inc., an investment management company for the global insurance industry headquartered in Hartford, Conn. The report tracks and analyzes both the insurance industry in the United States and non-U.S. insurance industry M&A activity across distribution and services sectors. Specific transactions are detailed and trends are analyzed across both sectors, Conning noted in a statement.

According to the report, global insurance distribution and services M&A transactions were up 10% in 2015 above the previous high reached in 2014. U.S. transactions grew by 18%.

“The distribution sector remains in a state of consolidation, with the number of global mergers and acquisitions transactions increasing for a third consecutive year,” said Jerry Theodorou, vice president of insurance research at Conning. “Additionally, deal volume in the aggregate reached a new high in 2015 at nearly US$20 billion, albeit driven by one significant transaction. Beyond the Willis/Towers Watson transaction, M&A activity in 2015 was highlighted by fewer transformational deals but a number of bolt-on transactions that help the buyers build out broader product offerings.”

Strategic buyers remained the most active acquirers of larger distribution firms, a characteristic consistent with 2014 M&A activity. Consolidators were active acquirers in 2015, with the 10 most active consolidators accounting for more than 35% of total distribution transactions, the statement noted.

Steve Webersen, head of insurance research at Conning, added that “facing a challenging business environment, strategic distribution buyers turned to transactions as an attractive way to grow and build out their platforms to serve clients.” Separately, the “insurance services sector transactions increased more than 25%, driven by acquisitions of claims adjusters/[third-party administrators], health services firms and insurance technology providers,” Webersen said.