KPMG: Four of the Top 5 global M&A deals in 2017, in the financial sector, were insurance related

27 June 2018 — Daniela GHETU
Four of the Top 5 global M&A deals, in the financial sector in 2017, totalizing USD 28.8 billion, occurred on the insurance sector's stage. The absolute star of the season was the acquisition of the US based XL Group's by the French AXA, for a total consideration of USD 15.26 billion.

The other three top operations were: acquisition of Validus Holdings (Bermuda) by AIG (USA) for USD 5.71 billion; acquisition of "Standard Life Assurance Ltd (Maj%) Vebnet Ltd" (100%) (UK) by Phoenix Group (UK) for USD 4.52 billion and the acquisition of Liberty Life Assurance Co of Boston (100%) by Lincoln National Corp, both USA based, by USD 3.3 billion.

The number of deals for the sector overall in 2017, the M&A Predictor report of KPMG shows, was relatively flat at 3,020 compared to 3,072 in 2016, while the value of 2017 deals was USD 253 billion, 20% less than one year before. In a multiannual perspective, the decreasing trend continued both in number of deal terms and in what the total value is concerned. In comparison with the last decade's highest peak point, the 2017 total M&A value was of about a quarter of the 2008 one, while the number of operations was by about 28% lower.

The number of deals involving insurance entities was also relatively flat, but the total value rose by 128%, the main driver of this spectacular change being the XL Group / AXA deal.

KPMG expects the total number of deals in the financial sector to increase in 2018 by about 10%, as there is still a strong flow of Chinese and Japanese capital in search for acquisitions, while the interest in fintech-related deals remains hot as banks and insurers strategically seek transformational technologies to remain competitive and growing. "We expect 2018 deal activity to be very strategic, as the insurance industry - like the entire financial services sector - faces huge demand for transformation and innovation that will drive greater customer engagement and top line growth. The focus globally will be on deals that provide opportunities to transform business models, access emerging innovative technologies and modernize operating models," said Ram Menon, Global Insurance Deal Advisory Lead, KPMG in the US.

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