Merger and acquisition activity for the insurance industry should increase in the next 12 to 18 months, particularly in the property-casualty, distribution and service sectors, according to a recently released report from Conning Research and Consulting, Hartford, Conn.
In the life segment of the insurance industry, the number of transactions increased slightly to 23 in 2006, compared with 21 in 2005, according to Clint Harris, a Conning vice president. The 2006 total is below the 10-year average of 30 life transactions, he notes.
In 2006, the dollar value of these transactions was roughly $5 billion, compared with $21.8 billion in 2005, Harris says. The reason for the large difference, he explains, is that 2005 included the Met Life-Travelers Life & Annuity and the Lincoln National-Jefferson-Pilot transactions. Conning includes transactions in the year they are announced, not completed, he says.
But, for the insurance industry as a whole, the number of transactions increased to approximately 400 in 2006, from over 300 in 2005, according to the report, “Mergers & Acquisitions and Public Equity Offerings-2007 edition.”
Part of that increase was driven by M&A in the distribution segment of the insurance industry, the report finds. The number of distribution M&A transactions grew to 246 in 2006, from 180 in 2005. While bank distribution M&A declined to 25% in 2006, from 28% in 2005, agencies purchasing other agencies grew to 62% in 2006, compared with 51% in 2005, according to the report.