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I. Review of M&A Activity in 2015
I. Review of M&A Activity in 2015
A. Market Trends – North America
1. By the Numbers
Fewer insurance M&A transactions in North America were announced in 2015 than in 2014, but the aggregate value of the transactions increased significantly. A total of 61 life and health and property casualty (“P&C”) insurance M&A transactions in North America were announced in 2015, representing over $58 billion in aggregate transaction value.1 A total of 73 transactions were announced in 2014, representing $17.3 billion in aggregate transaction value. When the activity in the M&A market for managed care insurance companies during the same periods is also considered, the disparity in aggregate transaction value becomes even more significant, with the transactions announced in 2015 having over $148 billion in aggregate transaction value as compared to approximately $17.6 billion for transactions announced in 2014.
Big dollar deals dominated industry headlines over the past year. Seven North American transactions in the life and health, P&C and managed care insurance sectors that were announced in 2015 had an equity value in excess of $5 billion. This number excludes the abandoned $11 billion merger between Axis and PartnerRe. For context, only four $5 billion-plus transactions in the industry were announced in North America over the prior nine years.
The trend toward big dollar deals was evident in all sectors of the industry. In the life and health sector, the number of transactions remained relatively flat year-over-year (21 transactions announced in 2015, compared to 19 in 2014), but the aggregate transaction value increased more than 60%, from $8.5 billion in 2014 to $13.7 billion in 2015. In the non-life/P&C sector, 40 transactions were announced in 2015 representing almost $44.5 billion in aggregate transaction value, as compared to 54 transactions
1 Deal volume and transaction values in this report are from SNL’s database.
Developments and Trends in Insurance Transactions and Regulation 2015 Year in Review
representing almost $8.8 billion in aggregate transaction value in 2014. Finally, the managed care insurance sector saw aggregate transaction value jump from $310 million in 2014 to over $90 billion in 2015.
We discuss some of the drivers of this activity and provide our views regarding future activity below.
2. In-Bound Investment from Asia
In our 2014 Year in Review, we commented on the increased participation in the North American and European insurance M&A markets from insurance and investment companies based in the Asia-Pacific region, and we predicted that this trend would continue. We were correct: the trend not only continued, it intensified. The year 2015 saw a boom in Japanese and Chinese acquisitions of North American insurance companies.
Asian buyers accounted for a substantial majority of the
most significant activity in the life and health insurance 1 sector in North America during 2015. Meiji Yasuda Life Insurance Company announced a $5 billion acquisition of StanCorp Financial Group Inc., Sumitomo Life Insurance Company announced a $3.7 billion acquisition of Symetra Financial Corporation and Anbang Insurance Group announced a $1.58 billion acquisition of Fidelity
& Guaranty Life. Another significant transaction in the
life and health insurance sector involved the acquisition
by Dai-ichi Life’s subsidiary Protective Life of a block of
term life insurance policies from Genworth Financial for
$661 million.
Asian buyers’ participation in insurance industry M&A during 2015 was not limited to the life and health insurance sector. In the non-life/P&C sector, Tokio Marine acquired HCC Insurance Holdings, Inc. for $7.5 billion, China Minsheng Investment Corp. announced a $2.24 billion acquisition of Sirius International Insurance Group from White Mountains Insurance Group, and Fosun International Limited announced a $2.1 billion acquisition