After advising on transactions with a total deal value of US$3 billion in December, this is hard evidence that M&A activity is returning to the insurance market says Clyde & Co.
Following a four-year downward drift in mergers and acquisitions in the insurance industry across Europe, market appetite for transactions is returning. In a flurry of activity over the year end, the Corporate Insurance Group at Clyde & Co. advised on nine separate transactions, with a total deal value of US$3 billion.
The largest of the deals (led by partners, Gary Thorpe and Stephen Browning) were the sale by private equity firm Bregal Capital LLP of its shares in Canopius Group Limited to Sompo Japan Insurance Inc. for a total consideration of $950 million and the acquisition of Torus Holdings Ltd by Enstar Group Ltd. for US$692 million led by Andrew Holderness, Global Head of the Corporate Insurance Group.
Andrew Holderness said: “The global decline in the volume of insurance transactions slowed in the second half of 2013 and we believe that it is starting to bottom out. The recent spate of transactions on which we have advised gives credence to this view and anecdotal evidence from the market points to a renewed appetite for M&A. We believe that this is set to increase as insurers looking for growth are more confident to seek acquisitions, not least due to the improving economic outlook in many markets.
“We are seeing significant interest in Lloyd’s in particular, which remains an attractive proposition for investment with a number of different parties (including private equity, existing businesses seeking greater scale and capital from emerging markets) seeking acquisitions or wanting to create start-ups. The principal reasons for this remain relatively constant; for a domestic insurer from outside Europe, a Lloyd’s business means immediate access to a global network of licenses, a pool of business and a rating – all for a moderately sized capital investment.
“Interest in Lloyd’s is unlikely to diminish but almost every underwriting business in the London market has talked about significant growth ambitions. Recent experience suggests that they will look to meet these at least in part through a greater focus on M&A.”
In recent weeks the Corporate Insurance Team at Clyde & Co. has advised:
* Private equity firm, Bregal Capital LLP on the sale of its shares in Canopius Group Limited to Sompo Japan Insurance Inc, for a total consideration of $950 million.
* Bregal Capital LLP on its purchase from Tower Group Inc of a 10 per cent stake in Canopius Group Limited for $69.7 million.
* Enstar Group Limited on its US$692 million acquisition of global specialty insurer, Torus Insurance Holdings Limited.
* Management on their MBO of Ark Syndicate Management Limited from private equity house, Aquiline, Swiss Re and Neuberger Berman for $420 million.
* Amtrust on its £56.6 million ($92 million) acquisition of Sagicor Europe Limited which includes Sagicor's Lloyd's managing agency and managed syndicates 1206 and 44.
* Markel Corporation and Markel Capital Holdings Limited on its recommended takeover of AIM quoted, Abbey Protection Group PLC for £116.5 million ($191 million).
* Proassurance Corporation on its arrangements with former Amlin underwriter, Duncan Dale, to set up a new syndicate at Lloyd's.
