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2023 insurance M&A outlook: Balancing uncertainty with optimism

Explore the trends impacting mergers and acquisitions in the insurance industry

Insurance merger and acquisition (M&A) activity tumbled dramatically in the second half of 2022, following a remarkable, record-breaking 2021. Facing continuing economic uncertainty and private equity (PE) pressures, how can insurance companies pursue promising deal-making opportunities to stay profitable in the year ahead? Our 2023 outlook reveals the latest trends and drivers so your company can better navigate the evolving insurance M&A landscape

A tale of two markets: Looking back at insurance M&A in 2022

Following a buoyant 2021, transaction volumes and values began tapering off in the first half of 2022, then tumbled in the second half. Total US and Bermuda volume in 2022 fell to 638 transactions with an aggregate value of $17.7 billion, a 27% volume decrease from 869 transactions totaling $57.5 billion in 2021. Overall deal value dropped 69% from 2021’s level.

For the first six months of 2022, total deal volume reached 254 transactions valued at $16.5 billion, a 32% volume decrease over 374 transactions equaling $22 billion in the same period the preceding year. In the latter six months of 2022, there were 384 deals valued at $1.2 billion, a 22% volume decrease from 2021’s comparable period.

Stalling insurance industry mergers and acquisitions activity directly reflected the year’s fast-accelerating inflation, which hit a 40-year high. Most insurers began tightening budgets in mid-2022 in concert with the economic slowdown. High market uncertainty—stemming from hard-to-predict inflation and interest rates, rising capital costs, and apprehension over transaction financing costs and availability—prompted buyers and sellers to pull back. We believe buyers remain eager to do deals despite the M&A market reversal, but the likelihood of completing transactions has fallen near term.

Looking for a deeper dive into the year in review? Our full 2023 insurance M&A outlook examines insurance M&A activity across megadeals; insurance brokerage; property and casualty (P&C); life and annuity (L&A); InsurTech; economic impacts; and regulatory, accounting standards, and tax developments.

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