When it comes to mergers and acquisitions, the insurance market is proving to be one of the most promising, especially if we consider the number of operations carried out in the last three years.
To understand the reasons for this growth and learn about some of the main transactions that have taken place in the insurance sector recently, we have prepared an article with a complete overview. Read on!
Mergers and acquisitions of insurance companies in numbers.
To speak of 2022 is to mention a year in which mergers and acquisitions in the insurance market took a leap and reached a record number, considering the last 10 years. Considering the world scenario, the sector registered 449 M&A operations, 31 more than in the previous year.
But 2021 was not behind in the number of transactions if we compare it with 2020, on the contrary, it was one of the most fertile periods in terms of negotiations carried out. To get a more precise idea, in the first half alone, the growth of insurers that were acquired or joined other companies was 275%, according to a survey carried out by KPMG at the time.
Leaving a macro view for more regionalized statistics, mergers and acquisitions were more prevalent in the American continents, totaling an average of 236 operations in 2022. As for Asia and Africa, both continents recorded an increase in negotiations last year – 22% and 41 %, respectively. European countries, on the other hand, were the ones that grew the least, with only two more transactions compared to 2021.
For 2023, there is a perspective that this area will continue at an increasing pace in general, at least that is what the National Confederation of Insurance Companies predicts, visualizing an estimated growth of 10%. This expectation is based on a solid view that the economy will undergo improvements – including an increase in GDP – and this, consequently, will bring a positive impact on the insurance sector.
Factors that led to the growth of M&A operations in the insurance sector
It is enough to look around to see that the world is undergoing constant transformations, especially with the improvement of digital resources and changes in consumption habits, and this brings consequences in several markets. With insurers it is no different.
The need to adapt to this new social perspective brought about by new technologies is one of the reasons that sharpen the search for merger and acquisition opportunities by insurance companies. Example: an insurance company may identify that the time has come to digitize its services and, for this purpose, resort to a merger with a startup specialized in creating applications.
The large number of existing insurance companies in Brazil – approximately 54 thousand – and the tendency for this market to remain heated over the years, is also a decoy for the interest of investors in the sector to remain high.
The insurance area also tends to react well to scenarios of economic difficulty and maintain a pace of growth even when other markets tend to retract. This feature certainly draws the attention of companies willing to expand their investments.
The search for an increase in competitive advantage, the intensification of competition and the desire to expand and diversify the portfolio of services are also triggers that encourage M&A operations between insurers. It is also worth mentioning the new regulatory framework, which is considered a watershed and brought several innovations to the sector.
Major mergers and acquisitions in the insurance market
In a market with its own dynamism and with new business possibilities at every moment, M&A operations between insurance companies are always signaling important negotiations that move the entire sector.
When we turn our attention to the mergers and acquisitions that took place in Brazil, for example, we can mention one of the largest transactions ever recorded between institutions in the insurance area, which was consolidated in the first half of 2022: the acquisition of SulAmérica by Rede D’ or , for an amount of approximately 15 million reais.
Worldwide, the purchase of Willis Towers Watson by AON for US$30 million was responsible for the creation of one of the largest global insurance companies, as a result of the union between the two companies.
On the Asian continent, investments also took place at full speed, with emphasis on the acquisition of MetLife Japan by Nippon Life , whose negotiation involved a value in excess of 3 billion dollars and brought a new configuration to the insurance market in Japan.
Strolling through the pet health insurance sector, it is also possible to mention an important M&A operation involving PetLove and Health For Pet.
Based on the information brought by the article, we can conclude one thing: the opportunities to invest in the insurance industry constitute a real perspective for companies that wish to increase their market shares or even expand their operations to other countries.
However, a merger and acquisition process, regardless of the sector, needs to go through a series of steps that require the support of a specialized consultancy for the results to be positive. Companies like 3Capital, with professionals who have more than 30 years of experience and several transactions in their portfolio, are ideal partners for these moments.
