The US insurance market will see increased merger and acquisition (M&A) activity over the next 12 to 18 months, according to analysts Towers Watson.

It says M&A activity in both the property and casualty and life sectors “should continue as long as the industry can effectively deal with remnants of the global financial crisis”.

Director Bruce Fell says property and casualty insurance pricing remains fairly weak. “Given that reserve levels are healthy, companies across the industry aren’t feeling the pain to correct to stronger pricing levels,” he said.

“Additionally, the valuations of many companies aren’t as strong as they were pre-financial crisis,” he said. “These factors have contributed to make it challenging for property and casualty companies to pursue an acquisition.”

More than 55% of all insurance M&A activity in the US since 2000 has been in the property and casualty sector, Mr Fell says.

“Opportunities exist for those insurers that have been able to retain their valuation in the market. The industry could begin seeing those companies acquire insurers that are not as strong, particularly smaller-sized players.”