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Middle East insurance M&A defies COVID-19-driven dip in 2020; expected to surge in 2021

Middle East insurance M&A defies COVID-19-driven dip in 2020; expected to surge in 2021
The Middle East and Africa witnessed the highest level in percentage terms

Mubasher: The insurance sector across the world has registered 407 completed merger and acquisition (M&A) deals in 2020, lower than 419 in 2019.

This record was mentioned by finding opportunity in adversity, the latest edition of global law firm Clyde & Co’s insurance growth report, published on Thursday.

During the second half (H2) of 2020, the number of M&A deals in the sector went up to 206, compared to 201 in the first six months of 2020, defying the anticipated coronavirus (COVID-19) pandemic impact on the activity.

The Middle East and Africa witnessed the highest level in percentage terms, with 32 completed deals in 2020, up from 12 in 2019. 

Meanwhile, the Americas remained the most active region for M&A deals in terms of volume, with 192 deals in 2020, while the number of deals in the Asia Pacific rose to 75 deals last year from 69 in 2019.

However, the activity in Europe retreated by almost a third year-on-year (YoY) to 103 in 2020 from 155 during the previous year. 

The report predicted that the volume of insurance M&A will hike in the first half (H1) of 2021, with a number of completed deals across the world likely to exceed 220 for the first time since 2019. 

The volume also could go even higher in the second half (H2) of 2021.

Dubai-based corporate insurance Partner, Peter Hodgins, commented: "Historically there have been significant road blocks in key markets such as the UAE and KSA due to a combination of unrealistic pricing expectations, a reluctance to sell to competitors, and significant regulatory hurdles in acquiring substantive holdings in listed entities."

Meanwhile, the Head of Clyde & Co's European Corporate Insurance Group, Ivor Edwards, remarked: "With deal announcements continuing apace, we expect the level of completed M&A in the coming months to accelerate as re/insurance businesses scent opportunities to build scale, generate efficiencies and reach new customers in new markets."