Multinationals are looking to balance emerging market growth opportunities with stability in investment returns, particularly with Australian insurance groups, according to a new report from Willis Towers Watson and Mergermarket.
Deal value for global insurance M&A was up €37 billion in the first six months of 2018, driven by a slew of megadeals which pushed value to its highest first-half total since the financial crisis, according to a new report from Willis Towers Watson and Mergermarket – Transformation in the global insurance market.
In Asia Pacific, major developments in regulatory change have impacted companies’ M&A plans. Multinationals are looking to balance emerging market growth opportunities with stability in investment returns, particularly with Australian insurance groups.
Kevin Angelini, strategy leader, insurance consulting and technology, Asia Pacific, Willis Towers Watson, added, “Chasing growth in Asia Pacific requires a lot of long term investment, which is hard to align with the generation of stable dividend streams. However, in China we foresee great opportunity for M&A deals as regulation changes are imminent, allowing greater foreign ownership and flexibility in joint venture arrangements.”
While these drivers support a positive outlook for global insurance M&A in the coming months, time to market may extend the phase to execution, given higher deal values and potential deal complexity.
The first half of the year saw 14 deals worth over €500 million taking place in this sector; although total deal volume was down to just 84 deals, the lowest number since 2009.
Key deal drivers behind this surge in value relate to the changing nature of business models. As regulatory pressures become the norm, new models are emerging and more businesses are seeking to return to their core strategy.
“We’re seeing a much longer stretch of time from announcement to closing” said Jack Gibson, Managing Director at Willis Towers Watson. “However, debt continues to be cheap, and following the recent tax reforms, US companies have been given a steroid kick. We will continue to see an active M&A market, it’s just a matter of paying the right price and overcoming the hurdles that have led to deals taking longer to consummate and perhaps driving the lower number of deals this year.”