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M&A activity drops amid Europe, China uncertainty

The number of mergers and acquisitions (M&A) in the global insurance sector dipped slightly last year, according to law firm Clyde & Co’s annual insurance growth report.

There were 350 completed deals last year, compared with 387 in 2016.

This is largely attributed to the fallout from Brexit. European M&As fell 22% to 118 as companies focused more on setting up subsidiaries and branches to ensure they can continue operating across Europe. Insurers outside Europe have also been freezing activity until the Brexit situation becomes clearer.

The Chinese Government’s plans to reduce investment limits for foreign insurers remain on hold, creating further uncertainty for M&A activity.

However, there was a rise in deals in the second half of the year – the first time M&A activity has risen in the second half since 2015. The Americas were the most active region, with 96 deals completed in the second half, and 80 in the first half.

Insurtech became a driver for growth in the insurance sector last year, the report says.

Clyde & Co notes Google and Amazon are well positioned to take advantage of the insurance market this year, reducing established insurance companies to white-label providers of licensed capacity.

Amazon has established a new insurance division in London and has plans to penetrate German, French, Italian and Spanish insurance markets.