Insurance M&A Activity Set for Growth in 2025

The insurance industry is anticipating a significant uptick in merger and acquisition (M&A) activity in 2025, as indicated by a recent Deloitte analysis. Nine out of ten insurers expect to finalize more deals than in 2024, which experienced lower transaction counts yet higher total deal values across all sectors. In 2024, the U.S. and Bermuda insurance industry saw a decrease in the number of M&A deals but an increase in aggregate deal values, particularly in the Life and Annuity (L&A) and Property and Casualty (P&C) sectors. The L&A sector experienced a notable decline in deal volume but an impressive surge in deal value, largely due to significant acquisitions such as Nippon's investment in Resolution Life.

Private equity has played a dominant role in the insurance M&A landscape over the years, although its involvement dipped in 2023 and 2024. Factors such as longer deal completion timelines and the impact of the economic climate have created uncertainty. Nevertheless, the political environment is expected to open new opportunities for strategic dealmaking, especially with the expiration of certain tax provisions at the end of 2025.

Additionally, the article discusses the insurance industry's growing focus on green transformation and sustainability initiatives. Environmental insurers are actively engaging with businesses transitioning to alternative energy solutions, providing support and coverage amid the rising interest in green practices. These shifts could amount to substantial market opportunities for insurers as they adapt to evolving risk landscapes and changing investment priorities.