Conning Research: Bigger Dollars But Fewer Deals In 2003 M&A

2004 Activity Likely to Rise, Says Annual Report on Insurance M&A and IPOs

(Hartford, CT) April 20, 2004 – 2003 mergers and acquisitions in the insurance industry reached the highest level since 1998 in dollar terms, even while the total number of transactions continued its long decline since the same year, according to a study by Conning Research & Consulting, Inc.

The study, “Mergers & Acquisitions and Public Equity Offerings, 2004 Edition,” found that total transactions declined by almost 7%, while transaction value increased by more than 600% due to a late-year flurry of insurance-related deals that ranked among the ten largest mergers in the world, totaling $43.6 billion. There was one mega-merger from each of the three major insurance sectors. The $59.9 billion industry total in 2003 was six times the total in 2002 and the second-largest value behind $165.4 billion in 1998.

“While the M&A hyperactivity of the late 1990’s did not spur substantive consolidation in the P&C and life industries, the current environment appears more conducive to growth through acquisitions,” said Clint Harris, a Conning Research analyst and the report’s author. “In fact, we have identified some key indications that M&A activity is likely to increase in 2004 for these and other sectors.”

Continuing its decade-long issuance of analysis of M&A and public stock offerings in the industry’s five traditional sectors – property-casualty (P-C), life, health/managed care, distribution, and insurance services – the Conning Research study found most trends of the prior two years continued through 2003 in all sectors. P-C and life insurers focused on seller-motivated sales of business units. Consolidation drove the health and distribution sectors, and the services sector continued in a relatively depressed state since the technology bubble burst.

“We expect that 2004 will present a change in industry transactions from what we have seen over the past few years” said Stephan Christiansen, Director of Research for Conning Research. “As the industry’s performance picks up, transactions will move from defensive and opportunistic to growth-seeking in their goals. Insurers will seek to repeat their 2003 performances this year, but they will be hard-pressed to do so organically. That is why we expect 2004, despite the lack of current pipeline, to finish with strong momentum for M&A.”

“Mergers & Acquisitions and Public Equity Offerings-2004 Edition” is available for sale from Conning Research & Consulting, Inc., by visiting the company’s Web site at

About Conning Research & Consulting, Inc.

The Conning name has represented excellence in independent insurance industry research for more than 90 years. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and can provide in-depth insights and analyses. Conning is headquartered in Hartford, CT, where it provides both public and proprietary research as well as consulting services to the financial services industry.