2018 witnessed a strong rebound in cross-border M&A activity with total deal values in the insurance sector reaching US$43.05bn, an increase of over 100% on 2017. In the reinsurance market where some of the largest transactions occurred, M&A activity continued to be driven by excess capacity fueled by investment from alternative capital sources, soft rates, and reinsurance losses.
Higher capital requirements in Europe under Solvency II have been a factor and inevitably Brexit has resulted in restructuring and some disposals. Low interest rates and expensive policy guarantees have also led insurers to consider shareholder returns. A number of transactions have featured insurers exiting capital-intensive legacy businesses with some looking to build wealth management platforms which combine pensions and asset management products.
Our Insurance sector group continued to lead the way on developments impacting the sector, hosting and presenting at client events on transfers under Part VII of the FInancial Services and Markets Act 2000 and the impact and opportunities in the sector arising from Brexit from the UK and Contiental European perspectives.
We also produced publications on key global trends in the sector as well as spotlight articles on insurance M&A, InsurTech, use of unmanned aerial vehicles (UAVs), sanctions, and the growing adoption of blockchain by the insurance industry.
We advised Canada Life, the UK insurance arm of the Canadian financial conglomerate Great-West Lifeco Inc., on the sale of its £2.7bn legacy insurance business to Scottish Friendly, a UK friendly society.
The sale allows Canada Life to concentrate on core markets and further accelerates its strategic push into annuities, wealth management, group and individual protection, and retirement solutions.
An M&A team from our London office led this transaction, with support from lawyers in Hong Kong and across Europe. The team also included lawyers from our employment, regulatory, and tax practices.
We advised CapSpecialty, Inc. on the acquisition of the renewal rights of Rockhill Insurance Group’s excess and surplus lines environmental insurance book of business and related assets and personnel.
This transaction highlights the 2018 trend of disposals of run-off and non-core businesses by some U.S. insurers seeking to restructure around core products or shed non-core blocks and the desire of other U.S. insurers to increase scale in specialty sectors where they have a presence.
The M&A team was led by lawyers in our New York office, with support from colleagues in Northern Virginia.
We advised the Gothaer Group, one of the largest German insurance companies, on the sale of its Polish subsidiary, Gothaer Towarzystwo Ubezpieczen, to Vienna Insurance Group, a leading insurance specialist in Central and
This transaction was part of the implementation of Gothaer’s 2020 strategy plan and allows the company to focus more on its core business in
The M&A team consisted of lawyers from our Dusseldorf and Warsaw offices.
We advised Sedgwick, Inc., a global provider of technology-enabled risk, benefits, and integrated business solutions, on the US$6.7bn sale of KKR’s majority stake in the enlarged Sedgwick group to The Carlyle Group, a global alternative asset manager.
This transaction allows Sedgwick to leverage The Carlyle Group’s expertise as informed and engaged strategic allies in global industry innovation.
The M&A team was led by lawyers in our London, Perth, Los Angeles, Shanghai, Paris, Hamburg, and Amsterdam offices, with support from our employee benefits, employment, pensions, and regulatory practices.
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