A new report by Deloitte indicates that merger-and-acquisition activity in the insurance industry was very slow, and reflects the huge overhang that low interest rates is having on life insurance industry growth. The Deloitte report said there was about a 40 percent decrease in the number of transactions in 2013 compared with 2012. Although the multiples related to these transactions were not publicly reported, in examining the average deal size from 2012 to 2013 it appears that there was a significant decrease in transaction size as well as aggregate deal volume, the Deloitte report said.
The report also said that although investments by private equity firms in the insurance industry primarily dealt with insurance distribution and brokerage, “their interest in both life and annuity companies is on the rise.”
The report suggests that 2014 may see an uptick in blocks of life insurance businesses going to private equity firms. Those private equity firms which have already run the regulatory gauntlet are likely to continue consolidating their insurance industry holdings, the report said. “However, firms contemplating market entry via M&A should move promptly if they hope to compete with established players,” the report said.