Expectations for a robust half of mergers & acquisitions in the Asia-Pacific region were frustrated during January-June by a high regulatory bar in some jurisdictions, law firm Clyde & Co says, with prospective acquirers facing higher solvency requirements.

The number of deals in the region more than halved in the first half to 18, from 37 in second half 2020, to be the lowest since 2011.

Elsewhere, deal volume in the Americas was up 7% to 116 and in Europe, up 2% to 51.

"Dealmakers in the US are comparatively bullish whereas their counterparts in Asia-Pacific remain more cautious as they wait for a more positive economic outlook,” Clyde & Co Partner Ivor Edwards said.

M&A in the global insurance industry dropped back slightly in the first half, with 197 completed deals worldwide, down from 206 in the second half of 2020.

In Australia, Hollard purchased Commonwealth Bank’s insurance division CommInsure, and Westpac sold its general insurance business to Allianz, and its captive Lenders Mortgage Insurance business to Arch.

Clyde & Co noted Australia’s Royal Commission into financial services conduct had now led to all four major domestic banks choosing to offload non-core lending businesses.

“Regulatory activity is driving divestment of insurance businesses, with some significant portfolios likely to become available,” the report said.

Clyde & Co Partner Joyce Chan says alternative routes to growth are being considered in the Asia Pacific, and M&A activity in the region is likely to remain subdued until markets have stabilised post-COVID and there is greater certainty about the economic outlook.

“Deal-makers in Asia Pacific remain in wait-and-see mode for the time being,” she said.

Insurers are considering a range of growth options, including strategic alliances with online banks, e-commerce giants, or other online retail platforms to access new distribution networks, Ms Chan said.