Middle East M&A: Transactional Risk Insurance Leads the Charge

10x Industry

Mokshita P.
10x Industry
Published:

Middle East M&A: Transactional Risk Insurance Leads the Charge

Report reveals a 32 percent drop in average premium rates for transactional risk insurance in 2023, despite decreased M&A activity. Notably, coverage increased by 13 percent, reaching 34 percent of deal value. In the Middle East, where diversification efforts drive M&A, nearly half of insurance deals focus on key sectors like renewable energy and technology, signaling growth opportunities.

So, Marsh just released this report on transactional risk insurance in Europe, the Middle East, and Africa. Basically, they found out that the average premium rates for this type of insurance dropped by a whopping 32 percent in 2023. Why? Well, there was a big increase in the amount of insurance available in the region.

Even though overall mergers and acquisitions (M&A) were down, transactional risk insurance was still a big deal in 2023. This insurance helps protect buyers and sellers from all the risks that come with M&A deals. People still wanted this protection, especially in key industries like renewable energy, real estate, technology, and manufacturing.

Despite the tough year for M&A deals, clients were buying even more coverage for each transaction. On average, they were getting 13 percent more coverage compared to the year before. And get this – the insurance now covers almost a third (about 34 percent) of the deal's value.

The Middle East is seeing some action too. With efforts to diversify their economies, there's still a lot of M&A activity expected in 2024. And guess what? Nearly half of the transactional risk insurance deals in the region last year were in those key sectors we mentioned earlier.

Nirav Modi from Marsh says that even though the M&A scene in the Middle East is tricky, transactional risk insurance is super important for making deals happen and attracting private investment. And he thinks that as this insurance market grows in the Middle East, we're going to see more cool stuff coming up – new insurance products and other ways to manage risks in this ever-changing economic landscape.