Insurance deals head for best year since merger boom

Insurance takeovers are headed for the biggest year since the peak of the last merger boom, as financial-services firms from Bank of America to Aegon NV of the Netherlands jettison assets.

Deals in the industry have jumped 60 per cent to $44.8 billion so far this year, up from $28 billion in the same period of 2009. Bank of America, Aegon and Royal Bank of Scotland Group Plc have more than $10 billion in insurance assets currently on the block.

The financial crisis that crippled American International Group Inc is providing a buying opportunity for competitors like MetLife Inc and Prudential Financial Inc, which were quicker to recover from the global recession and are seeking growth in new markets. AIG has sold more than 30 assets since its 2008 bailout, while RBS and Amsterdam-based ING Group NV were told to sell insurance businesses as conditions of their government lifelines.

“There’s a lot of stuff on the market,” said Clark Troy, a senior analyst at researcher Aite Group LLC in Chapel Hill, North Carolina. “For deep-pocketed buyers with firm conviction, it’s a great time to be making acquisitions.”

While the year’s biggest insurance deal collapsed when Prudential Plc shareholders stymied the company’s planned $35.5 billion takeover of AIG’s biggest Asian unit in June, the total value of announced deals is still set to surpass 2008 and 2009, when there were $58 billion and $53 billion in takeovers, respectively. That tally excludes a $40 billion US government infusion into AIG in 2008.

Insurance transactions totalled $90 billion in 2007.