Insurance M&A Activity Hits Record Low in H1 2025 Amid Caution

In the first half of 2025, global insurance carriers exhibited significant caution towards mergers and acquisitions (M&A), with deal activity plummeting to its lowest level since the financial crisis of 2008. According to a report by Clyde & Co, only 95 deals were finalized during this period, a stark decline from 106 in the same timeframe of 2024, and well below the ten-year average of 192 deals for the first half of the year. This downturn reflects broader economic uncertainties, geopolitical tensions, and regulatory challenges that have led many insurers to adopt a conservative approach to capital deployment.

The report emphasizes that despite a historical backdrop of robust M&A activity, the present climate has compelled carriers to retain their financial reserves and focus on selective investments. Peter Hodgins, Partner and Global Head of Corporate Insurance at Clyde & Co, stated, "There are a host of factors putting the brakes on global carrier M&A, including ongoing geopolitical tensions, tough economic conditions, and regulatory uncertainty. Getting deals done is hard, and they are taking longer to complete."

This cautious sentiment has been fueled by inflationary pressures and the persistence of high valuations in the market, which have deterred carriers from pursuing larger acquisitions. Instead, many have opted for smaller bolt-on deals, share buybacks, and organic investment opportunities. For instance, Sentry Insurance's acquisition of The General for $1.7 billion and Markel's purchase of the UK's MECO showcase the limited but ongoing interest in specific market segments.

Geographically, the North American market displayed the highest level of activity, with 35 deals completed, compared to 29 in Europe, the Middle East, and Africa (EMEA), and merely four in Latin America. Notably, cross-border transactions were rare, as many carriers preferred to concentrate on domestic opportunities. In the Middle East, while M&A activity remained subdued, there was a noticeable uptick in the life insurance sector as international players sought to expand into regional healthcare markets.

The report also highlighted a trend towards share buybacks, particularly in Asia, where listed carriers capitalized on lower share prices to repurchase their stocks. As the first half of 2025 concluded, several significant deals were announced, including Zurich's acquisition of AIG's Global Personal Travel Insurance and Assistance business for $600 million, anticipated to close later this year.

Despite the current downturn, experts suggest that pent-up demand among carriers for strategic growth could lead to increased M&A activity in the latter half of 2025. Hodgins added, "There are several large carriers in the market that have voiced their ambitions to make acquisitions this year. High-profile processes are continuing, while listed valuations may increase the appetite of some players for inorganic growth."

As insurers navigate this challenging landscape, the aggregation of Managing General Agents (MGAs) is expected to continue, granting carriers access to new markets and fostering innovation in insurance products. The Clyde & Co Insurance Growth Report, which forms the basis of these findings, utilized data from Refinitiv regarding completed M&A transactions from 2009 to 2024, complemented by qualitative insights from interviews with Clyde & Co partners worldwide. This comprehensive analysis indicates that while the current climate presents numerous challenges for the insurance sector, opportunities for growth and expansion remain on the horizon, particularly in emerging markets and regional aggregations.