A lot of uncertainty plagued mergers and acquisition activity in 2017. The international law firm Clyde & Co. — experts in mergers and acquisitions — says that will likely change in 2018. Company spokesman Andrew Holderness put that statement in perspective and said things have been tough for the last 18 months.
“Investment returns remain under pressure and will likely remain so for some time, despite the interest rate rises in the US and the UK — the first for a decade. Meanwhile, abundant liquidity in the market means there’s little room for insurers to differentiate on price. And the rise of broker facilities and an increasing number of managing general agents entering the market is putting additional pressure on insurers,” Holderness said.
On the positive for mergers and acquisitions, Holderness said the devastation of the 2017 hurricane season will impact the M&A landscape. Losses are going to hit billions of dollars and that will change things.
“We expect a number of insurance businesses will see their balance sheets come under increasing strain. This could serve as a trigger for a wave of M&A in 2018 as (re)insurers look for partners to help absorb these losses, or consider putting their businesses up for sale,” he added.
Source link: Insurance Business America