Insurance M&A expected to rebound in 2025 with investor confidence

Asia may see more inbound M&A, driven in part by currency advantages for US buyers.

Insurance merger and acquisition (M&A)activity is expected to recover in 2025 following a sharp decline in 2024, when only 204 deals were completed globally—a record low. 

Economic and political uncertainty, along with high transaction costs, contributed to the slowdown, with many insurers opting for managing general agents (MGAs) over traditional acquisitions, according to Clyde & Co.’s Insurance Growth Report 2025.

Reinsurers reported strong performance in 2023 and 2024, contributing to a record $655B in traditional capital. Many expect double-digit return on equity in 2025, assuming natural catastrophe losses remain within budget

1 April renewal activity showed more capacity and flexibility for buyers across classes of business, geographies, and company strategies. 

Key factors expected to drive M&A in 2025 include rising investor confidence, a strong US dollar, easing of US regulatory restrictions, and lower interest rates. 

The excess and surplus (E&S) sector continues to attract foreign investment, whilst consolidation is likely to accelerate in the Middle East due to regulatory shifts. 

Europe and Asia may see more inbound M&A, driven in part by currency advantages for US buyers.

Although a full return to pre-pandemic deal volumes is unlikely, insurers are expected to focus on transformational acquisitions and local strategic partnerships.

Activity across the Asia-Pacific region fell by 25% from the previous year. Hong Kong and China saw declining interest due to market saturation and geopolitical risks, with established players shifting focus to data analytics.

Regulatory changes are playing a dual role, with easing in the US attracting more investors, whilst stricter laws in Australia have restrained activity. 

High-demand sectors such as Australian property, European specialty lines, and Middle Eastern reinsurance are expected to attract buyers despite price volatility.

In Hong Kong, the implementation of a new risk-based capital regime may prompt smaller insurers to exit unprofitable lines, opening opportunities for acquisition. 

At the same time, growth in health and medical insurance is drawing investor interest and encouraging consolidation.

In Australia, geopolitical and market volatility, along with tighter antitrust enforcement from APRA and ASIC, slowed dealmaking in 2024. 

However, rising property insurance rates linked to extreme weather and a resilient life insurance market are expected to attract foreign buyers.