PE Investment Fluctuating in U.S. Insurance Industry
November 18, 2013
The insurance industry has been in the news quite a bit recently—big changes are on the way. One thing that won't likely be changing soon, though, is private equity's backing of the industry, which has been substantial over the years.
According to the PitchBook Platform, 290 U.S.-based insurance companies have taken in PE investments since the beginning of 2008. Deal activity has fluctuated significantly from year to year, up 23% one year (2011) and down 26% the next (2012). By deal count, 2011 marked the high point in the timeframe with 65 deals, almost double the low point of 34 in 2009. Carveouts have slowed to a crawl, with only one completed so far this year compared to a combined 14 completed in 2011 and 2012. Relative to other deal types, add-ons have been especially popular this year, accounting for almost three-quarters of 2013 activity versus 60% last year and 49% in 2008. Not surprisingly, some of the most active firms in the industry have been sponsors of rapidly expanding insurance platforms, like Apax Partners and Morgan Stanley (Hub International), as well as ABRY Partners (Confie Seguros).
Firms have taken a much bigger interest in the automotive insurance sector recently. During 2012 and year-to-date 2013, 15 auto insurance companies took in PE money, which comes close to doubling the total investments in the sector from all of 2008 to 2011.