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Insurance Growth
Report 2022
Navigating increasing complexity
INTERACTIVE PDF – OPTIMISED FOR DESKTOP
2
Contents 03 Overview
M&A activity on
04
the up in 2021
05 Five growth drivers to watch
11 Regional focus shifting
15 Increase in cross-border deals in 2021
16 Buoyant outlook for 2022
3
Overview Sentiment across the insurance
industry is markedly positive,
especially in the context of
events of recent years.
While 2021 saw the pandemic continue to
shape the economic and political landscape,
rising prices across all product lines, even
those perceived as difficult, generated
healthy top line growth for many insurance
businesses. The claims picture was relatively
benign. Although there were a number of
significant catastrophes, combined with
some large attritional losses, there were no
seismic events that would have depleted
market capacity. On the flipside, inflationary
pressures are starting to return and re/
insurance carriers are feeling the impact
of rising costs on their operations. The war
for talent has intensified post-COVID, as the
industry cannibalises its own talent pool
rather than look further afield. For those
businesses looking to expand, the decision
on whether to grow through acquisition or
by building out existing operations has never
been more relevant.
4
Volume of deals globally 2009-2021
M&A activity on Despite having to suffer through
300 291
282
272
289
the up in 2021
266
another year of the pandemic, 250
244
250
the global M&A market has held 225
219 222 221
206
its nerve. 200
200
192 192
201
186 186
196 197 201 197
180
170
While there are new avenues to growth 162
157
on the horizon, mergers and acquisitions 150
continue to provide attractive opportunities
for insurers to grow their businesses,
100
expand into new markets and acquire new
customers. Following a particularly busy
second half of the year for deal-making, 50
M&A activity for 2021 as a whole was back
close to the heights of 2019 levels. Deals in
the Americas were up strongly year-on-year, 0
while M&A in Europe saw a marked uptick
H1 2009
H2 2009
H1 2010
H2 2010
H1 2011
H2 2011
H1 2012
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
H1 2018
H2 2018
H1 2019
H2 2019
H1 2020
H2 2020
H1 2021
H2 2021
in activity in H2 2021. However, Asia Pacific
saw the number of completed transactions
drop to their lowest level since 2017. Activity
in the Middle East & Africa was also down
compared to last year, despite a relatively
strong second six months. 418
deals completed in 2021
(up from the previous year, 407)5 Five growth drivers to watch
6
Innovation takes Insurtech companies are coming However, with regulation in this space still
centre stage
embryonic, without a harmonised approach
into their own as engines of to regulating AI across jurisdictions, carriers
growth for the insurance sector. potentially risk butting up against individual Investment flowing into the insurtech space
country/state data protection laws in their keeps growing by leaps and bounds. The
The US remains the most developed market use of AI. In the Middle East, for example, successful insurtechs are at a place where, for
for insurtechs, with a number of firms having regulators are still relying on regulatory various reasons, they want to have that full
reached a mature phase of growth where sandboxes for these activities. Whilst stack insurance company. These companies want
they are now looking to acquire existing creating flexibility, this undermines certainty to grow further, go on to develop products and
insurance operations to become ‘full stack’ of regulatory approach to key issues. control their destiny.”
carriers, rather than becoming agencies that
sell policies on behalf of other carriers. In The experience of moving to remote
other regions, by contrast, the relative lack working during the pandemic has forced
of insurtech unicorns means that most firms insurance businesses of all sizes to Vikram Sidhu
are still too small to either partner with large overcome the issue of investment in Partner, New York
insurers or acquire carriers. outdated legacy IT systems by moving to +1 212 702 6773
cloud-based solutions. This is opening up vikram.sidhu@clydeco.us
Insurers are also looking to leverage opportunities for product innovation and
their abundant data to find new areas of greater agility as carriers partner with tech
growth, with an industry-wide push to firms on transforming their platforms.
make use of innovations such as artificial
intelligence (AI) and machine learning to
improve data capture and analysis and to
boost overall efficiency.7
New business Developing ecosystems will be The anticipated growth in parametric
models are
insurance business could form a key part
an important growth strategy of this. The growth of insurtech start-ups
for insurers in the year ahead:
emerging
writing parametric business via an MGA Any insurer who finds the right partners and
model is being paralleled by traditional builds up ecosystems that can be seamlessly
identifying key services that carriers expanding their existing parametric connected with a bank or another distribution
dovetail with their insurance offering across multiple business lines. partner will, in five years, be in a much better
Adding a variety of data and analytics position than those who just experiment in
products and integrating those providers and tech businesses to their this area.”
into their customer journey. digital ecosystems will help carriers
with structuring parametric triggers and
A recent McKinsey study on the value of facilitating payments on parametric policies.
digital ecosystems suggested they could Eva-Maria Barbosa
account for around EUR60 trillion in revenue Partner, Munich
globally by 2030. +49 89 244420101
eva-maria.barbosa@clydeco.com
While the insurance sector is firmly on the
path to digitalization following the move to
remote working during the pandemic, those
who don’t take full advantage of digital
platforms, and access to innovations such as
automation, data analytics and modelling are
likely to be left behind.8
Build, buy Alongside, or as an alternative Growth in M&A activity has been
or both?
accompanied by an increased appetite for
to acquisitions, insurers are also warranty and indemnity (W&I) insurance.
pursuing a number of avenues The Middle East, in particular, is emerging Brexit is acting like a slow puncture for the
as a growth W&I market as awareness of the London market. The UK branches are gradually
for generating organic growth. product grows, and European W&I carriers getting smaller as business migrates to Europe.
have had two record years in a row. The more As regulation gets ever more complex, so does
As well as the development of parametric
mature US W&I market also offers significant the ability to do business on a global basis – and
insurance products across a range of
room for growth. Brexit has highlighted this.”
business classes, which promises to be
a significant opportunity, other product
Following Brexit, many UK insurers are
innovations include coverage for the growing
looking to expand representative offices
use of telemedicine, a renewed focus on
in Europe into fully-licensed subsidiaries, Ivor Edwards
renewable energy solutions driven by ESG
to meet Continental demand for specialty Partner, London
imperatives, and emerging risk solutions for
capacity. For the London market, however, +44 (0) 20 7876 4162
climate change-related exposures.
this represents less of an opportunity than a ivor.edwards@clydeco.com
drain of capacity into Europe.
In the cyber market there has been a
continuing expansion of cyber insurance
operations and capacity, driven in part
by the proliferation of data protection
regulations around the world. China and
the UAE are examples of jurisdictions that
have introduced new cyber security and data
privacy legislation in recent months.9
Run-off business The legacy market remains In the Middle East, strong appetite for
proliferating
portfolio transfers as a means of divesting
a popular choice for the assets continues to build momentum for
divestment of non-core assets,
worldwide
the realistic prospect of a standalone run- Run-off is becoming a hot topic. I’ve had
off market in the region. While appetite more conversations with international run-off
whether from P&C carriers and among buyers and sellers, as well as specialists around accessing the market in this
banks selling off life insurance investors in legacy operations, is buoyant, region in the last 12 months than ever before.
the region’s regulators are still some way off This year we will see much more discussion with
divisions, or the spin-off of from delivering a workable framework for regulators and increased activity for the purpose
underperforming classes of run-off business. of run-off.”
business or subsidiaries due to In the US, run-off players still have plentiful
market conditions. capital available to conduct legacy deals.
A growing number of carriers are thinking Peter Hodgins
The legacy market remains a popular choice about how best to position themselves Partner, Dubai
for the divestment of non-core assets, for growth, post-pandemic, with strategic + 971 4 384 4000
whether from P&C carriers and banks selling disposals being considered as a route to peter.hodgins@clydeco.com
off life insurance divisions, or the spin-off freeing up capital.
of underperforming classes of business or
subsidiaries due to market conditions.
In Europe, the overhaul of Solvency II
regulations is putting a lot of pressure on
insurers to change their approach to both
underwriting and investments, to align
themselves with climate change goals, as
regulators look to restrict access to capital
relief measures for insurance business
stemming from carbon-intensive industries.10
A wider range Bancassurance continues to While launching start-up operations
of distribution
remains challenging in the current economic
be a growth market in Europe climate, the exit of capacity from some
and Asia, notwithstanding the
channels
markets is being matched by the licensing Partnerships between insurance and non-
of new players – notably in the Middle East insurance businesses is a major growth area,
retrenchment of banks from life where the DIFC has seen a number of new because when customers have a relationship
insurance business. underwriting vehicles established, including with an existing business, they think of it
Lloyd’s syndicates. Licensing has also been holistically. That kind of offering makes sense
Banking firms are continuing to have great a route to expanded distribution in Asia, as from the customer’s perspective. However, it’s
success in selling insurance through apps carriers look to set up in Hong Kong rather also a space the regulators are scrutinising
and online portals. However, while this than acquiring existing operations. very carefully.”
represents a good growth opportunity
for carriers it also requires a different Strategic alliances between insurers and
partnership structure, with insurers needing non-insurance business are also strongly
to invest heavily in additional capabilities, in evidence, whether with bricks-and- Joyce Chan
such as data analytics and improvements to mortar retailers, e-commerce platforms or Partner, Hong Kong
the online customer journey, to be able to technology firms. +852 2287 2752
service this business. joyce.chan@clydeco.com
The MGA market continues to grow,
particularly around insurtech platforms.
Strategic alliances between between carriers
and MGAs offer the former an easier route to
white-labelling new products than launching
their own new platforms.11 Regional focus shifting
12
Regional focus
Percentage of deals by region
60
Despite a growing number of
shifting deals in Europe in 2021 the 50
48.9
market still remains depressed 40
post pandemic. 33.4
30
There is lots of interest from potential
buyers but there simply are not enough 20
suitable targets. In contrast, general market 10.9
sentiment in the US – once again the world’s 10
5.4
most active market for M&A by some
margin – is more buoyant, which propelled 0
H2 2021
H1 2009
H2 2009
H1 2010
H2 2010
H1 2011
H2 2011
H1 2012
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
H1 2018
H2 2018
H1 2019
H2 2019
H1 2020
H2 2020
H1 2021
the country’s deal total in 2021 to a six-
year high. We expect this strong appetite
for deal-making to endure in the coming
Americas Europe APAC Middle East & Africa
year. Meanwhile, in Asia Pacific, the ongoing
impact of COVID-19 continues to dampen
appetite for M&A, and significant caution
Region 2020 2021 %change Increase in mega deals coming to market
around making investments will remain for
Global 407 418 +2.7%
the foreseeable future. Although the first – In 2021 there were 25 deals valued at over USD 1.0
Americas 192 224 +16.7%
half of 2021 saw very few deals in the Middle billion versus 20 in 2020
Europe 103 125 +21.4%
East and Africa, there was a notable uptick
APAC 75 41 -44.0%
– Geographic spread of big spenders
in activity in the second six months and we
MENA 32 17 -46.9%
expect this trend to continue with further – Eight acquiror nationalities among the top 20 largest
deals through 2022. deals by value versus 13 in 2020.
Region H1’21 H2’21 %change – Last year the US had six and France and South Korea
Global 197 221 +12.2%
two each
Americas 116 108 -6.9% UK hosts biggest deal of 2021
Europe 51 74 +45.1%
– Regent Bidco Ltd’s takeover of RSA Insurance Group
APAC 18 24 +33.3%
PLC for USD 9.2 billion was the largest deal of 2021
MENA 5 12 +140%13
160 Volume of deals in Europe 2009 - 2021
144
140 138
119
120
98
Activity in
98
100
87
85 88
Europe picks up
80 77
74 74
69 79
67
60 65 65 63
61 59
60 54
55
53 53
50 51
40
20
• Most active countries in Europe by number
0 of deals: UK 37, France 19, Spain 15
H1 2009
H2 2009
H1 2010
H2 2010
H1 2011
H2 2011
H1 2012
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
H1 2018
H2 2018
H1 2019
H2 2019
H1 2020
H2 2020
H1 2021
H2 2021
160 Volume of deals in Americas 2009 - 2021
140 132
136
129
122
120 116
107 108
102 104 102
Deals in the
99 97
100 95 93
89 90 92 89 90
83 84 86
Americas at
81
80 77
71
62
six-year high 60
40
20
• Most active countries in the Americas by number
0 of deals: US 180, Canada 17, Bermuda 15
H1 2009
H2 2009
H1 2010
H2 2010
H1 2011
H2 2011
H1 2012
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
H1 2018
H2 2018
H1 2019
H2 2019
H1 2020
H2 2020
H1 2021
H2 202114
80 Volume of deals in APAC 2009 - 2021
70
60
52 52
M&A in Asia
50
Pacific at
38
40 38 38
35 37
36 36 34
33 33
31
four-year low
29
30 28
27 26 26
26 25
23 22 24
21 20
18
20
10
• Most active countries in APAC by number of deals:
0 Japan 17, Australia 6, India 4
H1 2009
H2 2009
H1 2010
H2 2010
H1 2011
H2 2011
H1 2012
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
H1 2018
H2 2018
H1 2019
H2 2019
H1 2020
H2 2020
H1 2021
H2 2021
18 Volume of deals in ME&A 2009 - 2021
17
16
16 15
14
13
12 12 12
12
Mixed year for
11 11
10 10
10
deal-making in
9
9 8
8
7 7
the Middle East 6
8
5
5
& Africa
4 4 4 4
4
3
3
2
2
• Most active countries in the Middle East and Africa
0 by number of deals: Israel 4, Kuwait 4, UAE 2
H1 2009
H2 2009
H1 2010
H2 2010
H1 2011
H2 2011
H1 2012
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
H1 2015
H2 2015
H1 2016
H2 2016
H1 2017
H2 2017
H1 2018
H2 2018
H1 2019
H2 2019
H1 2020
H2 2020
H1 2021
H2 202115
Increase in In 2021, there was a 9% increase Percentages and directions of cross-border deals
cross-border in mergers and acquisitions 5%
involving foreign targets.
deals in 2021
2%
Cross border deals accounted for 22% of the
global total of completed deals, compared 35% 43%
to 21% the previous year, with the US and
the UK remaining the two most popular 12%
destinations with 21 and nine inbound 21% 0%
transactions respectively. Interest from North
0%
American buyers in European targets was up, 0%
accounting for 35% of outbound M&A from
17%
the region, compared to 24% in 2020. There
0%
was also a noticeable rise in traffic going the
other way with investment from Europe into
43%
North American targets up from 3% to 21%
year-on-year. However, Americas’ investors
pulled back from Asia as the percentage of
deals fell from 14% in 2020 to just 5% in 2021.
The number of cross-border deals involving
Asian acquirors was relatively muted, in
line with broader sentiment in the region,
with those deals that did get over the line
principally involving US and UK targets. 93 60%
completed cross-border deals of cross-border deals in
in 2021, up from 85 in 2020. 2021 were intra-region.16
Buoyant outlook Re/insurers have remained We expect that M&A activity will remain
for 2022
buoyant and that completed deals will
resilient in the face of global exceed 200 worldwide in the first half of
economic pressures, having 2022, rising above 220 for the second half
of the year.
come out the pandemic very
strongly in both underwriting There will be some regional variations, with a
continued lack of suitable acquisition targets
and investment terms, and in markets like Europe and Asia, in spite of
are positioning themselves continued interest from strategic buyers and
private equity. However, the MENA region is
for a more growth-oriented expected to see a burgeoning M&A market
environment in the next year this year, with more activity in GCC countries
than has historically been the case. Notable
and beyond. amongst potential acquirors in the US will
be the more mature insurtech firms, who are
looking to acquire existing carriers.
But there are some clouds on the horizon.
There are signs that market hardening is
In some regions, the run-off market is likely
slowing down at least in certain classes,
to benefit from strategic disposals as carriers
which will have an inevitable impact on
look to position themselves for a new era of
re/insurers’ balance sheets. Regulatory
economic growth. At the same time, portfolio
complexity is increasing, as too is the cost
transfers remain a viable source of growth
of compliance. In addition, the increasing
for companies who are reluctant to commit
possibility of interest rate rises is a double-
to full-blown acquisitions.
edged sword that will lift investment returns
but restrict the availability of capital to fund
However, re/insurers will continue to seek
acquisitions. Those positioning themselves
innovative solutions to the perennial issue of
for M&A activity may seek to accelerate their
generating growth, with a range of alternative
plans as a result.
options to acquisitions being deployed.17
Contributors
Vikram Sidhu Eva-Maria Barbosa
Partner, New York Partner, Munich
+1 212 702 6773 +49 89 244420101
vikram.sidhu@clydeco.us eva-maria.barbosa@clydeco.com
Ivor Edwards Joyce Chan
Partner, London Partner, Hong Kong
+44 (0) 20 7876 4162 +852 2287 2752
ivor.edwards@clydeco.com joyce.chan@clydeco.com
Peter Hodgins Mark Williamson
Partner, Dubai Partner, Guildford
+ 971 4 384 4000 +44 20 7876 5341
peter.hodgins@clydeco.com mark.williamson@clydeco.com440
Partners
1,800
Lawyers
4,000
Total staff
50+ *includes associated offices
Clyde & Co LLP is a limited liability
Offices worldwide* partnership registered in England and
Wales. Authorised and regulated by
the Solicitors Regulation Authority.
© Clyde & Co LLP 2022
www.clydeco.com
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