Canadian Underwriter

Global M&A: How does Canada compare?

November 14, 2017   by Canadian Underwriter

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Fewer insurance merger and acquisition (M&A) deals are being completed in the global insurance industry, but Canadian M&A does not appear to be following the global decline.

Global M&A volume sunk by 12.3% in the first half of 2017, although the value of the deals increased by 8.4%, according to a new survey by Willis Towers Watson (WTW) in conjunction with Mergermarket.

The global insurance sector is mimicking the overall trend, with deal volume falling by 17.7% from H1 2016, while value has increased by 170% over the same period.

Canadian M&A, however, proceeds apace. PwC Canada reported earlier this month that the total number of Canadian M&A deals through 2017 Q3 – including 29 insurance deals – increased 23% from 1,522 to 1,879 deals during the same period last year.

Last year, OPTIS Partners reported that insurance M&A in Canada and the U.S. (primarily P&C insurers or those selling P&C and employee benefits, or solely employee benefits) hit an all-time high in 2016 Q1, with 109 reported transactions in the first three months of 2016. The pace slightly outstripped 107 deals in Q1 2015.

WTW’s survey polled 200 senior-level insurance executives. The companies – 42% in the P&C sector, 42% in the Life sector and 16% in the Health sector – were split evenly across the Americas, Asia and Europe, Middle East and Africa regions, WTW reported in a press release on Tuesday.

Insurance firms that have been most acquisitive in the past anticipate the most future buy-side activity. Of those firms that have made between one and two deals in the past three years, 81% expect to make the same number of purchases in the next three years, WTW reported. And of those that made between three and four deals in the past three years, 44% expect to make three or more deals in the next three.

“This seems to signal that insurance M&A activity will continue to be driven by serial acquirers and those that have been active in recent years, as opposed to new entrants that have sat out the past few years finally sticking their toe in the water,” said Jack Gibson, global M&A lead with Willis Towers Watson M&A Risk Consulting. “A number of companies have made large acquisitions in the past two years and have been in integration mode. Once that completes, they can turn from being internally focused back to M&A.”