4 minute read 30 Jun 2021
surfer watching his friends surfing

Insurance M&A: A review of Q1 2021 and expectations for the rest of the year

By Martin Spit

Principal, EY-Parthenon, Ernst & Young LLP US and EY Americas Insurance Strategy and Transactions Leader

Help clients think through complex issues of strategic change, bridging organic growth strategies and inorganic transaction advice.

4 minute read 30 Jun 2021

The market continues to rebound from the pandemic as companies increase acquisitions to alter their business models in pursuit of growth

In brief

  • The Americas insurance M&A market was active during the first quarter of 2021, with valuations nearly 10 times the year-earlier period.
  • We expect an active M&A market in 2021, driven by the need to power digital transformation, enhance customer experiences and achieve other strategic goals.
  • Investments in digital delivery, artificial intelligence, software-as-as-service solutions and other insurtech innovations will continue to drive the market.

The COVID-19 pandemic is reshaping the insurance industry, driving the M&A market’s momentum. Transactions are centered on several key themes, including divesting of life insurance operations, bolstering digital capabilities, accelerating growth through new products and distribution, and making better use of capital through block transactions and partnerships with asset managers. Several company-specific circumstances could also help fuel activity. In this article, we share our perspectives on the market.

2021 first quarter insurance M&A in review

The market saw $30 billion in deals announced during the first quarter, compared to the $3 billion reported in the first quarter of 2020. Transaction volume for the quarter was identical to the year-earlier period, with 76 transactions announced.

The life insurance and annuities (L&A) space saw the greatest activity, as insurers looked to maximize capital and focus on core strengths through portfolio sales and reinsurance deals. Deals involving property and casualty (P&C) insurers were more difficult to execute, marked by Chubb’s unsuccessful takeover bid of The Hartford.

Notable deals included:

  • Apollo Global Management announced an agreement to merge with Athene Holding. The all-stock deal, valued at $11 billion, will combine Apollo’s asset management expertise with Athene’s retirement solutions business.
  • Hippo Enterprises, a home insurance insurtech firm, announced it would merge with Reinvent Technology Partners Z, a special purpose acquisition company (SPAC). The $5.5 billion deal allows Hippo to go public.
  • Massachusetts Mutual Life agreed to acquire Great American Life from American Financial Group. The $3.5 billion deal expands MassMutual’s annuities product line-up and distribution capabilities.
  • Allstate announced it was selling most of its life insurance business to investment firm Blackstone. The $2.8 billion deal allows Allstate to redeploy capital to the faster-growth personal property-liability space.
  • Sixth Street, a global investment firm, announced it was acquiring Talcott Resolution. The $2 billion deal makes Talcott a likely consolidation platform for further life and annuity acquisitions.

Key drivers in insurance M&A

Deal activity is being driven by several macro factors, including low interest rates, pandemic-related losses in life insurance and increased specialization. Equity and reinsurance deals in the L&A space show little sign of slowing, with price competition among reinsurers creating a seller’s market. P&C company divestitures of life insurance subsidiaries have been occurring more frequently.

Another important factor in recent activity is the need to quickly add digital capabilities in response to customers’ rapidly changing needs and expectations. According to the EY 2021 Digital Investment Index, global financial institutions reported that M&A as a vehicle for adding digital capabilities exceeded return expectations 52% of the time, compared to 45% for partnerships and 31% for in-house initiatives.

We expect to see continued deal activity driven by changes in four areas:

1.  Improving the customer experience

  • Ecosystem partnerships to add those capabilities in a capital-efficient way
  • Continued investment in digital capabilities to respond to changing consumer preferences

2.  Using capital efficiently

  • Block sales to private equity firms or other consolidators capable of squeezing greater returns from blocks in a low-rate environment
  • Continued reinsurance deals on closed blocks and annuities to free up capital
  • Continued efforts to de-risk L&A business operations
  • P&C divestitures of money-losing life insurance operations and noncore businesses to focus on core operations

3.  Pursuing growth

  • Acquisitions of competitors in core or adjacent markets to enhance a company’s competitive advantage
  • Combinations of complementary strengths to expand product and distribution capabilities — 2+2=5 deals
  • Opportunistic acquisitions to build market share by capitalizing on the sector’s relative financial strength

4.  Responding to external pressures

  • Anticipating how the Biden administration’s corporate tax policies and regulatory stances will impact insurers
  • Adjusting to rapid changes in the social-justice, climate and sustainability arenas
  • Preparing for future pandemic-related challenges, which could lead to further consolidation
  • Reacting to venture-backed competitive threats in the digital insurance and SaaS spaces

In addition, company-specific circumstances have opened the door for several large insurers to engage in potentially significant transactions. Insurers we are watching include:

  • AIG, which could divest its life and retirement business to free-up capital to invest in faster-growing businesses
  • The Hartford, which remains in play after the Chubb discussions


The surge in insurance M&A transaction values during the first quarter of 2021 suggests the potential for a record year, as insurers position themselves to compete in an evolving competitive landscape. The market’s future will be shaped by external factors, including the pandemic’s evolution and potential changes to federal tax and regulatory policies, but mostly by insurers’ willingness and ability to use M&A as a tool for achieving strategic growth objectives.

The author would like to thank John Ferrara, Senior Manager, EY Consulting, for his contributions to this article.

About this article

By Martin Spit

Principal, EY-Parthenon, Ernst & Young LLP US and EY Americas Insurance Strategy and Transactions Leader

Help clients think through complex issues of strategic change, bridging organic growth strategies and inorganic transaction advice.