Worldwide Insurance Mergers Fell In '08, Except For U.S. P-C

In 2007 the U.S. p-c sector had merger activity worth $.16.6 million, Conning said. It found non-U.S. property-casualty came in at $14 billion, less than half of what was reported in 2007.

Conning noted that geographically the most significant declines were in non-U.S. transaction value.

However, Mr. Christiansen said, "In the U.S., the value of insurance industry transactions, at about $31 billion, was the third lowest value we have tracked since 1995."

He said the drop-off in activity was a global phenomenon, "reflecting uncertainty in conditions and a general lack of currency with which to execute transactions."

Mr. Christiansen mentioned that non-U.S. life and health, at $5.1 billion and $580 million, respectively, were both a fraction of the prior year transaction values. "In both U.S. and non-U.S. regions we have seen some activity emerging in 2009, but transactions are expected to continue at low levels until economic conditions stabilize."

The report noted that American International Group's financial difficulties and resulting efforts to liquidate asset had led to a "massive level of anticipation," but "actual transactions have been modest compared with expectations."

Conning said recent "information from the company suggests that the urgency surrounding possible transactions is being slowed."

The report did not include the recent announcement of AIG's arrangements to sell its 21^st Century auto unit to Zurich for $1.9 billion.

Overall for 2009, Conning said merger transactions seem to be following the patterns set in 2008 of greatest activity in the brokerage/agency sector, some activity in the property-casualty arena and some small transactions in the life arena.

"However, a poor capital markets environment and a sluggish or declining economic outlook continue to stifle transactions that might otherwise make strategic sense in the operating environment of the industry sectors," the firm commented.