US insurance M&A activity expected to ‘increase significantly’ in 2021

Written by Adam Cadle

08/12/2020

US insurance M&A activity is expected to “increase significantly” in 2021, according to Clyde & Co.

After a year which the US insurance industry has had to grapple with the global pandemic, the severe economic downturn and other factors such as political uncertainty, insurance deal activity in 2021 will be robust, Clyde & Co stated, due in part to improving market conditions attracting more capital into the industry.

“In addition, with interest rates at historic lows, buyers may look to tap cheap debt or deploy funds stored away during the pandemic to fund acquisitions. Increasing premium rates and a more optimistic outlook for most lines of business will make stronger market players more likely to look for growth opportunities through acquisitions, some of which may have been put on hold in 2020 due to the pandemic.

“As the economy begins returning to a more stable state in 2021—presumably after the introduction and widespread dissemination of COVID-19 vaccines—insurers will benefit from a reduction in both the regulatory and commercial uncertainty which resulted from the pandemic, which will allow for more focus on longer term strategy and deal-making,” the global law firm concluded.

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