Insurance Mergers & Acquisitions: What to Watch in 2023
In 2021, mergers & acquisitions filled the desks of insurance analysts and business leaders. As the industry experienced rapid expansion, the financial stability of the global economy was slipping behind the scenes. In 2022, M&A deals dropped nearly 30% from the year before due to rising interest rates and 40-year-high inflation. Although interest rates are still expected to rise in the remainder of 2023, experts are hopeful that insurance providers will see a resurgence in deals due to recently-cooled inflation and a semi-optimistic outlook from the Federal Reserve.
Insurance brokerage has always appealed to private equity firms and institutional investors, and in 2023, that dynamic is even more important because it is expected to feed the resurgence of insurance M&A deals. Recovery may happen slower than anyone wants, with the most recent predictions showing late 2023 or early 2024 as the stabilization target for the industry as a whole.
Industry leaders should be keeping an eye on embedded insurance deals where insurance companies partner with non-insurance businesses to provide a broader portfolio of benefits to their customers. This offers an out-of-the-box approach to revenue recovery and positions the industry to withstand future volatility through diversification. In the same vein, expect to see higher demand for specialty brokers, rate hardening in reinsurance and property and casualty commercial lines, and increased life and annuity deals.
Insurance isn’t the only industry that is betting heavily on 2024; the entire global economy remains hopeful for a noteworthy comeback after a challenging post-covid nosedive. Mergers & acquisitions in insurance may not look the same as before, but the deals are there and ready to be made, organizations simply need to know where to look.
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