24 December 2019News

M&A in 2020: activity or stagnation ahead?

There has been a flurry of mergers and acquisitions (M&A) activity in the re/insurance market as a whole, and on Bermuda in particular, in recent years.

XL bought Catlin and was snapped up in turn by AXA. Markel bought Nephila, Apollo acquired Aspen, AXIS Capital purchased Novae and AIG bought Validus—that’s not even the full list of recent M&A deals that Bermuda:Re+ILS has reported on.

As a part of our ongoing series of articles based around a series of survey questions that we sent out for our readers, we asked ‘Do you think that 2020 will see further M&A activity?’ Readers could pick only one answer.

The results were mixed, but a majority of readers—67 percent of those polled—said yes, they expected there to be more M&A activity in 2020. According to industry veteran Andrew Barile, who chose this option in the survey, this is because there are 5,000 private equity firms looking for acquisitions such as captive insurance managers, reinsurance brokers, etc.

On a global basis others agree with this, according to a report from Standard & Poor’s (S&P) released in August 2019. (

In that report S&P said that challenging market conditions in the global reinsurance sector and cheap financing sources will continue to drive consolidation, adding that M&A activity over the past two years demonstrates the convergence of primary insurance, reinsurance, and insurance-linked securities markets, and the desire to diversify internationally.

However, there are some who have concerns about just how many opportunities for further M&A lie on Bermuda, due to the shrinking pool of companies there. According to Clyde and Co’s Insurance Growth Report mid-year update, which was also released in August, M&A in the global insurance industry did indeed rise in H1 2019 with 222 completed deals worldwide, up from 196 in H2 2018.

There were 63 cross-border deals, representing 28 percent of the global total, as re/insurers look to extend their reach into new territories. But after a number of years of inbound activity Clyde & Co said that the pool of targets in Bermuda is shrinking, with just one deal involving a Bermudan target closing in H1—Apollo’s $2.5 billion acquisition of Aspen.

There were dissenters as well in the Bermuda:RE+ILS survey, but they varied in their thoughts on what will happen to the market in 2020. Just 8 percent said there would be less M&A activity over the coming year, with a further 25 percent saying that instead of entire companies being acquired it would be more a case of parts of companies—as in lines of business or sub-units of companies.

One anonymous reader who picked the ‘less M&A activity’ option said: “There will be fewer M&A because many of the candidates have been acquired already. I do think there will be some, however.” However, they added the caveat: “More commonly, I think, parts of organisations will change parents.”