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Private Equity-Backed Buyout Deals in the Insurance Industry - August 2013

by Kapil Joshi

  • 22 Aug 2013
  • PE

Preqin’s Buyout Deals Analyst shows that Q3 2013 YTD has been the most significant quarter in terms of aggregate deal value for the insurance sector since Q1 2006. This is largely due to Hellman and Friedman’s acquisition of Hub International Limited for $4.4bn, which accounted for 80% of the aggregate value of private equity buyout investments in the insurance sector so far this quarter. This deal is the largest private equity-backed deal in the insurance industry since 2006.

When comparing the 2006-2013YTD insurance data and the other industries within business services (financial services, outsourcing, consulting and legal services), the quarterly aggregate deal value of the insurance sector surpassed the aggregate deal value of the other business services cumulatively for the first time in Q3 2013YTD since Q1 2006. The aggregate deal value for the insurance sector in Q3 2013YTD was $5.5bn compared to $2.2bn for the combined aggregate value of other business services.

Insurance’s rising prominence within the business services sector is given further credence by the increasing proportion of total deal value attributed to this industry when compared with the other business services. In 2013 YTD the aggregate deal value of private equity buyout investments in insurance made up 36% of the total value of deals within the overall business services sector. Even though this year’s figure is influenced by the recently announced acquisition of Hub International Limited, Preqin’s data shows a steady rise in the proportion of aggregate capital invested in insurance compared with other industries within the broader business services sector in recent years, from 6%-7% in 2006-2009 to 15% in 2012.

In terms of regional breakdown of private equity-backed buyouts in the insurance sector from 2006 to 2013 YTD, North America attracted the majority of invested capital. Of all global buyouts in the insurance industry, 66% of the capital ($22.2bn) has been invested in North American companies, with European deals accounting for 24% of the global total and Asia and other regions accounting for the remaining 10%.

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