Despite high levels of capital and declining opportunities for organic growth, insurance mergers and acquisitions declined sharply in the United States last year, according to “Global Insurance Mergers & Acquisitions in 2012: Fragmented Patterns in an Uncertain Environment,” from Conning. The study tracked and analyzed M&A activity across P&C, life-annuity, health insurance and distribution and services sectors in the United States and Canada.

“Mergers and acquisition activity in the U.S. insurance market dropped in 2012, with transactions off 19 percent and aggregate deal volume off 21 percent,” said Jerry Theodorou, analyst at Conning. “In 2012, high levels of industry capital and limited opportunity for organic growth suggested that it should have been a very active year. Yet transaction activity declined significantly from 2011.”

M&A activity was strong in the first quarter of 2012, but very slow in the next two quarters, due to concerns about U.S. economy and economic conditions elsewhere. The study presents information on 741 transactions, and includes an analysis of the drivers and themes characterizing the transactions, Conning said.

“That turned around significantly in the fourth quarter, where we saw a substantial uptick in activity in most sectors, which may well set the stage for a strong 2013,” said Stephan Christiansen, director of research at Conning. “Outside the U.S., the pace of insurance M&A declined less, buoyed by financial institutions selling their insurance operations to raise assets to repay government loans or meet regulatory requirements.”

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