APAC saw lowest insurance M&A deals since 2011

M&A decreased by as much as 51% in H1 2021.

Asia Pacific saw its completed insurance mergers and acquisitions (M&A) deal drop from 37 to 18 in the first half of 2021, according to Clyde & Co’s Insurance Growth Report mid-year update.

According to the report, this is the lowest level APAC recorded since Clyde & Co began the report in 2011.

The report found out that the sharp drop in M&A activity in the Asia Pacific was attributed to the high regulatory bar in some jurisdictions.

“Not only do prospective acquirers face higher solvency capital requirements in some markets, but there is a more robust scrutiny of business plans to assess the longevity of new entrants’ interest,” the report said.

Joyce Chan, a partner at Clyde & Co Hong Kong, said M&A activity in APAC would likely remain subdued until the markets have stabilised post-COVID-19 and there is greater certainty about the economic outlook. 

“Deal-makers in the Asia Pacific remain in wait-and-see mode for the time being. Given the cost and effort required to get transactions over the line, insurers are considering a range of growth options. These include strategic alliances with online banks, e-commerce giants, or other online retail platforms to access new distribution networks. The MGA model is likely to expand, especially in the medical insurance sector due to the uptick in middle-class spending coupled with an ageing population,” Chan added.