Global insurance dealmaking hit a sharp downturn in the first half of 2023, with completed mergers and acquisitions plunging to 171 worldwide. That figure marks a steep decline from 207 transactions closed in the previous six months and 242 during the same period last year, according to Clyde & Co’s mid-year Insurance Growth Report.
The slump signals a broader recalibration across the industry. Insurers face persistent inflation, rising interest rates, and geopolitical uncertainty. Yet many carriers continue to hold strong balance sheets, which positions them to ride out the turbulence without relying heavily on bank financing.
The Americas absorbed the heaviest blow. Deal volume there collapsed to 79 transactions, down from 104 in the second half of 2022, representing the region’s weakest performance since 2014. The United States still led all countries with 60 completed deals, but that total fell sharply from 83 in the prior six-month window.
Europe mirrored the downturn. Forty-seven deals closed across the region, marking its slowest stretch in more than ten years. The United Kingdom managed 11 transactions, topping France and Germany, though it slipped to fourth place globally behind Canada and Japan.
Asia Pacific saw a modest contraction from 33 to 29 completed deals. Japan dominated the region with 14 transactions, while Australia, China, Hong Kong, and South Korea each recorded three. The Middle East and Africa stood alone in posting growth, edging up from eight deals to nine.
Eva-Maria Barbosa, a Munich-based partner at Clyde & Co, predicted the pause will prove temporary. She noted that carriers operate with limited leverage on strategic moves and currently hold ample capital. As a result, she expects dealmaking among insurers to resume shortly, while private equity money flows back toward broker acquisitions.
### Insurtech appetite splinters by region
Demand for insurtech targets cooled noticeably in certain markets, contributing to the broader M&A slowdown. European startups in the space struggle to secure funding amid stubborn inflation and climbing borrowing costs. Meanwhile, the US market suffers from a shortage of genuine insurtech companies reaching the deal stage, with many so-called targets actually resembling traditional carriers chasing new distribution channels.
Private equity interest remains vigorous elsewhere. Latin America and Asia continue drawing attention, especially nations with deep internet penetration like Indonesia, Vietnam, the Philippines, and Thailand. Personal lines businesses in those countries look particularly attractive.
Joyce Chan, partner at Clyde & Co in Hong Kong, emphasized that PE firms want exposure to Asian tech players at every development stage. International funds and regional asset managers split the prospective capital pool roughly evenly. She added that as artificial intelligence becomes more embedded in insurance operations, investment should flow back to insurtech globally, given the sector’s natural ability to harness emerging technology.
### Regulation cuts both ways
Regulatory pressure squeezes some insurance activities by raising operational costs, yet new rules in certain territories unlock fresh opportunities. Hong Kong’s risk-based capital regime, set to launch in 2024, could trigger a wave of transactions as firms unable to meet standards exit specific lines. Across the Middle East, mounting regulatory requirements push incumbents toward international best practices, spurring consolidation that opens the door to further M&A.
Peter Hodgins, a Clyde & Co partner in Dubai, observed that regulators in the region have grown more assertive without dampening deal activity. Authorities want carriers to strengthen their operations and force out financially weaker participants, he said, which creates openings through market consolidation.
### Cyber risks reshape due diligence
Cyber exposure now ranks among the top five concerns for dealmakers conducting due diligence on acquisition targets, climbing from a top ten worry in previous years. Buyers increasingly focus on how cyber vulnerabilities and interconnected systems could create liability after a transaction closes. Imprecise warranty language around IT systems and data protection often fails to catch problems that surface later.
Rosehana Amin, a London-based partner at Clyde & Co, highlighted the legal complexities tied to data controller responsibilities. She pointed to the danger of inherited legacy data and the importance of contracts that explicitly assign accountability. A compromise involving acquired data could expose the relevant entity to regulatory fines and intense scrutiny.
### Cautious optimism ahead
Transaction volume likely will not revisit 2022 peaks in the near term, but activity should rebound during the second half of the year. Barbosa explained that M&A growth typically trails market improvements by eight to twelve months, making the recent dip unsurprising. She expects deal counts to climb toward the end of 2023 as insurance businesses adapt to current conditions, with brokers spearheading the recovery.
Firms pursuing growth also look beyond their home markets. Barbosa noted rising interest among international players seeking direct entry into the US insurance market through strategic acquisitions. At the same time, foreign capital continues flowing back into the Middle East via investments in regional brokers and third-party administrators, a trend she believes will persist.
