PwC's European Life Insurance Mergers, Acquisitions and Restructuring Outlook 2023

The European economy has faced challenges on multiple fronts over 2022; principally the fallout from the COVID-19 pandemic and geopolitical instability following Russia’s invasion of Ukraine. As a result, energy prices have risen to unprecedented levels, causing the level of inflation and interest rates to soar.

These challenges are having a marked impact on the insurance industry, leading to significant falls in asset values and the share price of listed insurers falling 30% over the first nine months of 2022 vs an overall market fall of only 12%.

Despite the issues presented by the economic and political climate, the landscape for life deals is still optimistic, with European deal activity continuing to be observed. The majority of our survey participants are expecting deal volumes to remain relatively unchanged and participants are continuing to look for portfolios in excess of €1bn.

We expect to see high volumes of transactions across all markets in Europe, driven by both push and pull factors. Investors are seeking growth through increased economies of scale and greater levels of diversification. The adverse economic environment is a driver for insurers to:

• focus on their core markets;
• examine capital deployment; and
• reduce leverage and simplify operations.

These objectives can be achieved from a combination of disposals, portfolio deals; and restructuring activities such as reinsurance. We expect deal activity to continue at pace across all of the core markets in Europe, with portfolio deals highly likely in the UK and Belgium, consolidation activity continuing in Germany and Italy, and the French market opening up to consolidators in the medium term.