Europe has seen the biggest fall in the volume of insurance M&A, with a pronounced decrease in activity in 2011 which has continued into the first half of 2012. There was a 21% fall in deals done between 2009 and 2010 - and a further 18% decline in 2011. The Americas is the leading region in terms of number of transactions and has accounted for 52% of global M&A activity in the insurance sector over the past 12 months. This has been driven predominantly by the US - not surprisingly given its maturity and size - as well as increased activity in Latin America. Asia Pacific has seen its share of global M&A activity drop from a high of 24% in the first half of 2011 to 8% in the first six months of 2012.
HOLDERNESS said: "It is likely that last year's uptick was a result of deals being completed that had been put on hold during the financial crisis. Now however, while boards and investors are still interested in doing deals, there is a high level of caution about making sure it is the right deal on the right terms - and that is slowing transaction activity".
The fallout from the global financial crisis, regulatory reform and the desire to look beyond mature markets for growth remain the underlying themes driving activity, similar to the last year. In addition, 2012 will see "the effect of the on-going European debt crisis and post-catastrophe recapitalisation after one of the most expensive years ever in terms of catastrophe claims".
Speaking about the future trens, HOLDERNESS believes that "the market is at something of a crossroads. There are a number of factors that could kick start M&A activity in the next 12 months. For example, a significant catastrophe creating widespread balance sheet damage and resulting in a sharp turn in the pricing cycle may kick start new investments, while continued solvency deterioration in the Eurozone may force more asset sales or corporate transactions".