Market Overview
- The insurance services industry experienced a decline in dealmaking activity at the end of 2023 due to economic uncertainty, driven by unclear interest rates and a broader market environment. This downturn was exacerbated by a mismatch in the life and annuity market between the available capital for acquisitions and the types of assets insurers were interested in purchasing.
- While YoY M&A volume in the sector decreased 21%, YoY deal value increased by 63%, due to a handful of large strategic acquisitions that have closed over the last year. The lack of deal volume in Q1 2024 has created a surplus of demand from private equity investors and is expected to fuel a busy market.
- In 2023, insurers recalibrated their tax strategies due to the OECD’s Pillar Two global minimum tax and Bermuda’s new 15% corporate tax, effective January 1, 2025. Additionally, the U.S. corporate alternative minimum tax introduced further complexity for M&A activities, necessitating early consideration of these tax matters in deal planning and compliance.
- The rise of Insurtech startups, with AI-enabled platforms that increase the efficiency at which claims and risk can be evaluated, are also causing disruption within the industry. Senior leaders and experts are deeply considering the impacts of AI, including GenAI, as businesses rapidly adopt applications like ChatGPT to achieve immediate performance gains and plan for long-term transformation.
Industry Snapshot
Over the forecasted period from 2024 to 2029, the insurance services market is expected to grow at a CAGR of 8.7% to $1.4 trillion.
