Global merger and acquisition (M&A) activity in the life & health industry during the first six months of 2014 is on track, in terms of total dollar value, to be consistent with 2013 reported activity.
This is according to newly released research from A.M. Best, which found that 14 life and/or health deals were announced globally in the first half of 2014, with a total disclosed value of approximately $10.6 billion, a little more than half of the roughly $18 billion in activity for all of 2013.
A.M. Best observes that much of the recent activity in the L/H segment continues to reflect: industry consolidation, some of which concerns larger players looking to gain additional scale, as was the case of Dai-ichi of Japan's acquisition of Protective Life; veteran acquirers entering into new markets as a means to diversify globally; and the influx of new participants into existing markets primarily backed by private-equity organizations.
The report found that the factors driving the consolidation of the industry include: The impact of the sustained period of low interest rates, regulatory challenges causing insurers to focus on less capital-intensive and market sensitive products, and the lower expected margins in certain lines of business.
From the sell side, it was found that much of the M&A activity has been driven by the desire to "de-risk" balance sheets and focus on core competencies. A.M. Best believes that product mix has gradually shifted toward offerings that are less capital intensive and have less generous benefits.
M&A, life, health, A.M. Best, report