Global insurance mergers and acquisitions (M&A) activity is set to rebound in 2025 following a sharp decline in 2024, when only 204 deals were completed—a record low, according to the latest Insurance Growth Report from Clyde & Co. The drop in deal-making was attributed to a combination of economic and political uncertainty, high transaction costs, and insurers’ preference for managing general agents (MGAs) over traditional acquisitions.
Despite the slowdown in 2024, reinsurers have reported strong performance in 2023 and 2024, contributing to a record $655 billion in traditional capital. Looking ahead to 2025, many analysts expect a double-digit return on equity, assuming that natural catastrophe losses remain manageable.
Renewal activity for the April 1st period indicated increased capacity and flexibility for buyers, spanning various business sectors, geographies, and corporate strategies, further fueling optimism for the year ahead.
Several factors are expected to drive the M&A market in 2025, including rising investor confidence, a strong US dollar, easing regulatory restrictions in the United States, and lower interest rates. Foreign investment continues to flow into the excess and surplus (E&S) sector, while consolidation is anticipated to pick up in the Middle East due to evolving regulatory frameworks.
Both Europe and Asia are expected to see more inbound M&A activity, with US buyers benefiting from favorable currency advantages. While the volume of deals may not return to pre-pandemic levels, insurers are expected to prioritize transformational acquisitions and local strategic partnerships.
In the Asia-Pacific region, M&A activity declined by 25% in 2024, with Hong Kong and China seeing reduced investor interest due to market saturation and geopolitical risks. As a result, established insurers in these regions are increasingly shifting focus to data analytics to stay competitive.
Regulatory changes are playing a complex role in M&A dynamics. In the US, the relaxation of regulatory restrictions has attracted more investors, while stricter regulations in Australia have led to a slowdown in deal-making.
However, high-demand sectors such as Australian property, European specialty lines, and Middle Eastern reinsurance remain attractive to investors, despite ongoing price volatility.
In Hong Kong, the introduction of a new risk-based capital regime could lead smaller insurers to exit unprofitable lines, opening up acquisition opportunities. Additionally, growth in health and medical insurance is drawing investor interest, contributing to consolidation in the sector.
In Australia, geopolitical uncertainty and market volatility, coupled with tighter antitrust enforcement from the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC), slowed M&A activity in 2024. Nevertheless, rising property insurance rates linked to extreme weather events, along with a resilient life insurance market, are expected to draw foreign buyers in the coming year.
Related topics
