Political volatility and a high-value, low-volume merger and acquisition (M&A) environment are to blame for the weaker performance of insurers that made acquisitions last year, according to Willis Towers Watson.

It is the first time since 2010 that acquirers have performed worse than groups that did not undertake M&A deals.

The broker’s assessment is based on its Insurance M&A Performance Tracker, which analyses all deals exceeding $US50 million ($63.8 million) in the industry worldwide.

“The analysis we have done is based on annual data going back to 2008,” Senior Consultant Brendan McMaster said.

“Underperformance by acquirers has happened once before, so it is worth noting that it 
is not unprecedented. The long-term trend still shows acquirers outperform their peers.”

Ace’s $US28.3 billion ($36.1 billion) acquisition of US insurer Chubb was one of the biggest deals completed last year.

Willis Towers Watson says patience is the key for insurers planning M&A activity.

“The main observation is that although acquirers in the insurance sector haven’t done as well [last year] as they have in previous years, there are plausible explanations for this,” Europe, Middle East and Africa Life Insurance M&A Leader Fergal O’Shea said.

“Since 2008 insurance acquirers have outperformed the market, a trend that has become even more pronounced since 2012.

“M&A is still beneficial and it will be interesting to see what the data for [this year] shows.”