2023 Insurance M&A Outlook (2024)

2023 insurance M&A midyear update

The number of deals this year to date was relatively flat compared to the same period in 2022. However, the first half of 2023 saw aggregate deal value approximately half of that for the same period in 2022. This midyear update explores four separate general trends and how related M&A activity has progressed in 2023, with an additional two trends worth following.

First, our data source indicates that demand in the broker segment remains consistent YOY. In the P&C space, the expectation is that, in this rate environment, reinsurers may focus on driving business as the mechanism to grow and enhance shareholder return.

Additionally, recent loss experience has several traditional reinsurance avenues pulling back as companies recalibrate their risk appetite. In turn, an increase in demand has made the P&C reinsurance sector attractive for alternative forms of capital.

The two trends worth keeping an eye out for moving forward are focused on industry convergence and embedding auto coverage. Though industry convergence may slow in 2023 as some companies look to strategically rebalance their portfolios, this trend is not expected to hinder the continued move forward. On the other hand, even though embedded insurance has taken a bit of a back seat in early 2023, the outlook remains strong.

Read the latest update to gain a better understanding of where these trends are headed and how you can keep up with them.

A tale of two markets: Looking back at insurance M&A in 2022

Following a buoyant 2021, transaction volumes and values began tapering off in the first half of 2022, then tumbled in the second half. Total US and Bermuda volume in 2022 fell to 638 transactions with an aggregate value of $17.7 billion, a 27% volume decrease from 869 transactions totaling $57.5 billion in 2021. Overall deal value dropped 69% from 2021’s level.

For the first six months of 2022, total deal volume reached 254 transactions valued at $16.5 billion, a 32% volume decrease over 374 transactions equaling $22 billion in the same period the preceding year. In the latter six months of 2022, there were 384 deals valued at $1.2 billion, a 22% volume decrease from 2021’s comparable period.

Stalling insurance industry mergers and acquisitions activity directly reflected the year’s fast-accelerating inflation, which hit a 40-year high. Most insurers began tightening budgets in mid-2022 in concert with the economic slowdown. High market uncertainty—stemming from hard-to-predict inflation and interest rates, rising capital costs, and apprehension over transaction financing costs and availability—prompted buyers and sellers to pull back. We believe buyers remain eager to do deals despite the M&A market reversal, but the likelihood of completing transactions has fallen near term.

Looking for a deeper dive into the year in review? Our full 2023 insurance M&A outlook examines insurance M&A activity across megadeals; insurance brokerage; property and casualty (P&C); life and annuity (L&A); InsurTech; economic impacts; and regulatory, accounting standards, and tax developments.

What’s the insurance M&A news for 2023?

Not surprisingly, the two most powerful 2023 M&A drivers are inflation and interest rates. The Federal Reserve Board (the Fed) has indicated that it expects to continue raising rates, but in smaller increments than occurred in 2022. When rates settle, we expect to see companies begin deploying capital for acquisitions. M&A activity will happen, but with subdued frequency and at lower prices compared to the higher valuations in 2021.

We expect insurance brokerage to be the first sector to recover. Given its high deal volume and appeal to PEs, distribution likely will be a leading indicator for insurance M&A overall. The fact that PE interest waned only slightly last year suggests that financial buyers view brokerage positively despite rising interest rates and believe that longer-term growth will offset any increase in deal cost. In the interim, however, brokerage appears to be influenced by insurance M&A softness overall.

When insurance M&A begins to recover will depend on the length and depth of the economic slowdown. Based on current forecasts by economists, however, we believe the insurance M&A market may begin to recover in late 2023 or 2024.

2023 insurance M&A trends and drivers

How can growth-minded insurance organizations extend their ride on the insurance M&A wave? As part of their strategic M&A planning process, executives should consider how to address the following trends. Download the full outlook to explore all the important insights.

Building resiliency for the path ahead

To offset potential challenges in the coming year, we recommend looking for ways to drive strategic partnerships, such as how insurance and non-insurance partners can go to market together and/or create shared opportunities that generate new income streams.

Insurers should decipher how to stay profitable in a slowed economic environment, with or without recession, and ensure balance sheet health by controlling wages and other costs. For acquirers, we advocate staying current on top-flight potential targets, including monitoring actions that may signal need or willingness to sell. The objective is to manage the current economic slowdown while positioning a business to thrive post-economic slowdown. Insurers that succeed will have the greatest choice of M&A targets—and will likely emerge farthest ahead—in 2024 and beyond.

If you’d like to talk more about insurance M&A activity and how your organization can thrive in 2023, let’s set up a conversation. And visit our Insurance industry page for broader industry insights, analysis, and resources.

Fullwidth SCC. Do not delete! This box/component contains JavaScript that is needed on this page. This message will not be visible when page is activated.

Get in touch

2023 Insurance M&A Outlook (1)

Doug Sweeney

Insurance | DTBA LLP


+1 212 436 5417

Doug is the National Risk & Financial Advisory Insurance leader for Deloitte Transactions and Business Analytics (DTBA) LLP. He provides valuation and financial consulting services to leading insuranc... More

2023 Insurance M&A Outlook (2)

Mark Purowitz

Principal | Deloitte Consulting LLP


+1 215 606 1983

Mark is a senior partner in the Mergers & Acquisitions (M&A) practice of Deloitte Consulting LLP, where he leads Strategy & Transformation for its broad M&A practice, as well as Deloitte's work on the... More

2023 Insurance M&A Outlook (3)

Matt Hutton

Partner | Deloitte & Touche LLP


+1 212 436 3055

With more than 18 years of experience, Matt is a partner in Deloitte & Touche LLP's mergers & acquisitions (M&A) Transaction Services practice and focuses solely on financial services transactions. Ma... More

Latest news from @DeloitteFinSvcs

Sharing insights, events, research, and more

I am an expert in insurance M&A (mergers and acquisitions) and have a deep understanding of the topic. I have extensive knowledge of the trends, drivers, and dynamics of the insurance M&A market. I can provide insights into the current state of the market and offer guidance on how organizations can navigate and thrive in this environment.

Now, let's dive into the concepts mentioned in this article:

Insurance M&A Trends in 2023:

The article mentions several trends in the insurance M&A market for 2023. These trends include:

  1. Demand in the broker segment: The demand for insurance brokers remains consistent year over year (YOY).
  2. Focus on driving business in the P&C space: Reinsurers may focus on driving business to grow and enhance shareholder return in the property and casualty (P&C) space.
  3. Traditional reinsurance avenues pulling back: Recent loss experience has led to traditional reinsurance avenues recalibrating their risk appetite, creating an increase in demand for alternative forms of capital in the P&C reinsurance sector.
  4. Industry convergence: The trend of industry convergence, where different sectors within the insurance industry merge or collaborate, may slow down in 2023 as some companies strategically rebalance their portfolios.
  5. Embedded insurance: Embedded insurance, which refers to integrating insurance coverage into non-insurance products or services, has taken a back seat in early 2023 but still has a strong outlook.

Insurance M&A Drivers in 2023:

The article also highlights the key drivers of insurance M&A in 2023, which are inflation and interest rates. The Federal Reserve Board (the Fed) expects to continue raising rates, albeit in smaller increments than in 2022. Once rates settle, companies are expected to deploy capital for acquisitions. However, M&A activity is likely to occur with subdued frequency and at lower prices compared to the higher valuations seen in 2021.

Recommendations for Growth-Minded Insurance Organizations:

To extend their ride on the insurance M&A wave, growth-minded insurance organizations should consider the following strategies:

  1. Building resiliency: To offset potential challenges in the coming year, organizations should drive strategic partnerships, explore opportunities for collaboration between insurance and non-insurance partners, and create shared opportunities that generate new income streams.
  2. Staying profitable in a slowed economic environment: Insurers should focus on staying profitable in a slowed economic environment, controlling costs, and ensuring balance sheet health. Acquirers should stay current on potential targets and monitor actions that may signal a need or willingness to sell.

These recommendations aim to help organizations manage the current economic slowdown while positioning themselves to thrive post-economic slowdown.

I hope this information provides you with a better understanding of the concepts discussed in the article. If you have any further questions or need more specific information, feel free to ask!

2023 Insurance M&A Outlook (2024)


Top Articles
Latest Posts
Article information

Author: Kerri Lueilwitz

Last Updated:

Views: 5584

Rating: 4.7 / 5 (67 voted)

Reviews: 90% of readers found this page helpful

Author information

Name: Kerri Lueilwitz

Birthday: 1992-10-31

Address: Suite 878 3699 Chantelle Roads, Colebury, NC 68599

Phone: +6111989609516

Job: Chief Farming Manager

Hobby: Mycology, Stone skipping, Dowsing, Whittling, Taxidermy, Sand art, Roller skating

Introduction: My name is Kerri Lueilwitz, I am a courageous, gentle, quaint, thankful, outstanding, brave, vast person who loves writing and wants to share my knowledge and understanding with you.