April 14, 2005 by Canadian Underwriter
The total number of mergers and acquisitions (m&a) was up last year in the U.S., but the value of transactions was down, according to a new study by Conning Research & Consulting Inc.
M&a activity rose over the prior year for the first time since 2001 spurred by the health care and distribution sectors. But 2004 did not see any “mega-merger” deals (valued at US$10 billion or more), with the total value of transactions less than US$15 billion.
“Certainly, we found consolidation plays in the health/managed care sector, but we also identified them in the property-casualty and life sectors,” says Conning analyst Clint Harris, who says the number of transactions will likely spur more and larger deals to come.
Insurance remains a highly fragmented industry, “still very ripe for consolidation”, says Stephen Christiansen, research director at Conning. “The 2004 transaction activity did more to reshape individual sub-segments in the market than to increase industry concentration, but we anticipate continued consolidation in the coming years, as companies strive for market position in the face of accelerating competition.”