Insurance Sector Poised for M&A Growth and IPOs in 2024

The insurance industry is anticipated to see a boost in business for investment bankers in 2024, with an uptick in mergers and acquisitions (M&A) activity and a more active initial public offering (IPO) market. Leaders at Stonybrook Capital, a strategic advisory focused on the re/insurance industry, noted that insurer financial activities have increased, driven by growth, generational ownership shifts, and more. Investment banking is witnessing a ‘record year’ for M&A as the previously stagnant deal flow appears to be revitalizing due to various economic factors.

With an increasing appetite from buyers for deals previously stalled due to external pressures like inflation and geopolitical tensions, sellers are poised and ready. Stonybrook is also engaging with companies seeking to divest non-core segments of their portfolios. Moreover, the opening of the IPO market is seen as a potential exit opportunity for private equity investors, possibly leading to new entrants in the market.

Stonybrook has been concentrating on the niche financing market utilized predominantly by mutual insurers. This includes the use of surplus notes, a debt instrument gaining favor among smaller companies as a substitute for costly quota share reinsurance, especially amidst the challenges posed by severe weather events in the Midwest. This interest in surplus notes has surged as they offer a solvency boost, making them an attractive option for mutual insurers facing losses from storm-related perils.