Spike in global acquisitions

The value of global acquisitions in 2015 surged to US$195 billion with the US, Japan and China snaring the lion’s share of purchases.

A new study by investment management firm Conning Inc. found that the spike in the aggregate value of global insurance transactions was four-times higher than 2014.

Of those deals, 24 were worth more than $1 billion – three times higher than 2014 – no small part due to an increased appetite for growth emanating from Japan and China.

“Record-setting global mergers and acquisitions activity in 2015 was characterised by an unprecedented number of high-value strategic transactions,” says Conning Inc. Insurance Research Vice President Jerry Theodorou.

“Close to half of the billion-dollar-plus transactions were outbound transactions by Japanese and Chinese buyers, as the Japanese sought external growth opportunities and the Chinese pursued asset accumulation and diversification strategies.

“Four consolidation transactions among U.S. health insurers alone, valued at $100 billion, accounted for more than half of the global insurer mergers and acquisitions value.”

The Conning study tracks and analyses global merger and acquisitions activity across the property-casualty, life-annuity and health insurance sectors. Specific transactions are detailed, and trends are analysed across all sectors.

“M&A activity in 2015 was driven by continued low interest rates, high levels of industry capital, and low-growth economies in developed countries,” says Conning Inc. Head of Insurance Research Steve Webersen.

“While many of these issues have been in place for some time, they came to a head in 2015, as insurers capitulated to the need for acquisitions to spur growth.

“Looking forward, the transformative consolidations of 2015 may pressure other competitors to merge, and may also provide opportunities for mid-market players as certain components of the merged businesses are spun off and talent is displaced.”