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Deloitte: more Bermuda M&A activity expected

John Johnston, CEO of Deloitte Caribbean and Bermuda

It has been a busy start to the year for mergers and acquisitions involving companies in Bermuda’s insurance space.

In January, American International Group announced its $5.6 billion acquisition of Bermudian-based Validus. This was followed on Monday by French multinational Axa’s move to buy XL Group for $15.3 billion.

There are several more Bermudian-based companies that could prove attractive for mergers or buy-ups, and this year is shaping up to be a positive environment for such deals, according to research by Deloitte.

The company has released its 2018 Insurance M&A Outlook report, which examines trends seen during the past two years and identifies key expectations and challenges for this year that may help insurance executives pinpoint M&A drivers and plan their strategy accordingly.

John Johnston, chief executive officer of Deloitte Caribbean and Bermuda, said: “Bermuda companies continue to be highly sought after in the ongoing consolidation of the global insurance and reinsurance industries. The two headline deals announced this year — AIG’s acquisition of Validus and Axa’s plan to purchase XL — are striking examples of this.

“There are several other Bermuda companies who would prove to be highly attractive merger partners or outright acquisition targets based on the strong businesses they’ve built, and there are buyers from different corners who appear willing to fully recognise that value in pricing.”

Mr Johnston said there are also some Bermuda companies for whom a transaction might be more of a strategic necessity, due to a desire for increased scale or need for diversification.

He added: “We expect more M&A activity globally in the remainder of 2018 and we certainly expect the Bermuda market to feature prominently in that.”

The Deloitte report looks at the continuing evolution of the deal landscape and identifies key drivers for insurance sector M&A activity, including modernisation of the value chain, tax reform and regulatory policy, valuations, foreign investment in the US market and insurtech. The outlook report is aimed at giving insights to insurance executives so they can made confident decisions.

To access the full report, visit www.deloitte.com//bm/en/insurance-m-a-outlook