Global dealmaking stalls as insurers rethink big moves

NEW YORK — Global mergers and acquisitions (M&A) activity in the insurance sector has slowed to a crawl in the first half of 2025, with carriers shying away from blockbuster deals amid soaring valuations, macroeconomic headwinds, and geopolitical uncertainties, according to a new report from Clyde & Co. Carrier-led M&A hit its lowest half-year total since the 2008 financial crisis, with just 95 deals completed from January to June—down from 106 in the same period last year and well below the 10-year average of 192. This cautious stance reflects a broader softening in global dealmaking, where overall M&A, venture financing, and private equity transactions dipped 2% year-over-year through July, per GlobalData. For U.S. investors and businesses, the trend signals a shift toward smaller, more strategic plays that prioritize stability over aggressive expansion, potentially reshaping the competitive landscape in an industry already strained by climate risks and regulatory pressures.

The slowdown comes as insurers grapple with elevated interest rates, persistent inflation, and the lingering effects of the Trump administration’s trade policies, which have introduced volatility into global markets. “The decline in deal activity and the fall in volume across all deal types suggests a cautious approach, possibly due to economic uncertainties and shifting market dynamics,” said Aurojyoti Bose, lead analyst at GlobalData. While M&A volumes remained relatively flat (down just 1%), venture financing fell 4%, and private equity deals plummeted 14%, highlighting a risk-averse environment where big-ticket items are under scrutiny. The geographic impact has been uneven, with North America and Europe bearing the brunt, while emerging markets show glimmers of opportunity for selective entries.

Key Drivers Behind the Stall: High Valuations and Macro Uncertainty

Insurers are rethinking “big moves” due to a confluence of factors. High asset valuations—fueled by a post-pandemic rebound in premiums—make large acquisitions prohibitively expensive, while macroeconomic jitters, including potential U.S. tariffs on imports and a projected global GDP growth slowdown to 2.8% in 2025 (per IMF estimates), have prompted boardrooms to hit pause. Regulatory hurdles, such as antitrust reviews and evolving ESG (environmental, social, and governance) standards, are also prolonging deal timelines, with many transactions taking longer to close than in previous years.

Peter Hodgins, global head of corporate insurance at Clyde & Co, noted the complexity: “Getting deals done is hard and they are taking longer to complete.” Instead of pursuing transformative megadeals, many carriers are channeling resources into capital management, share buybacks, and smaller domestic transactions that offer quicker returns with lower risk. This pivot aligns with broader industry trends, where private equity firms—holding record dry powder of over $2 trillion globally—are selectively targeting niche assets rather than overhauling entire portfolios.

Interest in managing general agents (MGAs) remains a bright spot, as these platforms offer low capital requirements and operational flexibility, appealing to both carriers and private investors. MGAs enable quick access to specialized lines like cyber or climate risk coverage without the baggage of full-scale integrations. However, the overall volume drop underscores a “wait-and-see” mentality, with executives wary of overpaying in a potentially softening market.

Data sourced from Clyde & Co and GlobalData. Figures reflect announced and completed deals.

Notable Deals Amid the Downturn: Smaller Wins and Strategic Plays

Despite the stall, a handful of significant transactions highlight where insurers are focusing their efforts. In the U.S., Sentry Insurance’s $1.7 billion acquisition of The General from American Family Insurance stands out as a rare large-scale move, bolstering Sentry’s auto insurance footprint in a consolidating market. Similarly, Markel Group’s purchase of marine MGA MECO underscores the appeal of specialized, low-overhead entities that can plug gaps in niche expertise.

Other examples include ongoing interest in InsurTech integrations, such as Guidewire’s acquisition of HazardHub for enhanced risk modeling and Duck Creek’s $2.6 billion deal for Imburse, aimed at scaling payment capabilities. These deals, while not transformative on a global scale, demonstrate a preference for bolt-on acquisitions that enhance digital resilience and geographic reach without excessive risk. In the U.S. specifically, PwC’s midyear outlook notes a surge in brokerage and MGA activity, with 307 deals announced from May to mid-November 2024 (pre-dating the full 2025 slowdown), totaling over $20 billion—driven by private equity’s push into property/casualty assets.

The U.S. market, which accounts for 60-70% of global InsurTech M&A, remains a hub for such activity, though volumes have dipped as firms await clarity on economic policies. Regional mutual insurers are also affiliating to diversify geographically, with a record pace of mutual holding company conversions providing financial flexibility.

Outlook: Pent-Up Demand and a Potential Rebound

Analysts see signs of pent-up demand that could spur a pickup in the second half of 2025 and into 2026. Hodgins predicts higher activity as carriers seek strategic growth, particularly in emerging markets like Latin America and Asia, where economic expansion could enable greater insurance penetration. International players are positioning for M&A that grants access to high-growth regions, with MGAs serving as a gateway for multi-jurisdictional expansion.

Broader forecasts from Deloitte and McKinsey emphasize innovation as a catalyst: AI and generative AI could streamline due diligence and risk assessment, while ecosystems of partners help insurers embed products into customer journeys. However, challenges like climate-driven uninsurability risks—exacerbated by events like the 2025 floods in China and landslides in Switzerland—may force further rethinking, potentially limiting big moves if premiums continue to rise unsustainably.

For American stakeholders, this stall presents both risks and opportunities. U.S.-based insurers like those in the P&C sector could benefit from domestic consolidations, but global uncertainty might inflate reinsurance costs. PwC anticipates a “deals-friendly” environment under the current administration, with private equity realizing value from assets to fuel more transactions. As one expert put it, “While the insurance sector continues to be attractive to investors and has remained resilient through challenging market conditions,” selective dealmaking will define winners in a landscape where caution reigns. Investors should monitor upcoming economic data and policy shifts for signals of a thaw.