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Insurance for M&A Deals Surged in 2020

Source: Marsh

The communications, media and technology sectors held the highest number of insurance policies to protect M&A deals in 2020 according to new data from Marsh McLennan. Mergers and acquisitions in the technology sector held the most deal volume in the United States at $346.5 billion, a result of an increase in e-commerce, remote working and digital transformation in different sectors.

M&A activity in the U.S. was down 21% by value and 16% by deal count in 2020 compared to 2019. Despite this sudden halt in activity during the second quarter, transactional risk insurance in the U.S. and Canada reached record highs in the fourth quarter — ending in a total of $545 billion in deal value. Insurers shifted their focus to COVID-related impacts on companies.

The transactional risk insurance market will face multiple challenges in 2021, such as a continued increase in claims frequency and severity, rising costs and a focus by insurers on claims related to COVID-19. 

Lithium-Ion Battery Prices Fall to Lowest in a Decade

The average price of a lithium-ion battery has fallen more than 88% since 2010. What once cost more than a thousand dollars now costs less than $200, according to numbers from Bloomberg.

Companies like Tesla have made advancements in making battery technology available to mass consumers. The Powerwall, for instance, has solved a problem that long troubled the clean energy market: that solar power is most plentiful when people are least likely to be home — throughout the day. With cheap lithium-ion batteries, solar power can be stored and used when people come home to watch TV, cook dinner and engage in other activities that use up electricity.

Inexpensive batteries also increase the appeal of mass-market electric vehicles, which consumers have shown resistance to due to “range anxiety” — the notion that electric vehicles can only go so far without recharging. A decade of advancements in battery technology means that clean energy, along with its potential to contribute to a net-zero future, is now becoming more affordable.

Europe Outperforms the US in Boardroom Gender Diversity

Europe Outperforms the US in Boardroom Gender Diversity

Europe has done a better job working to bring more women into boardrooms than the U.S. has, according to an analysis done by Bloomberg. Almost 37% of board seats in Stoxx Europe 600 companies were held by women last month, compared to 30% of directors in S&P 500 companies.

The average number of female directors in Europe was at four in August, compared with an average board size of 11. The Bloomberg Gender-Equality Index rose 2.3% in August, marginally underperforming the MSCI World Index, which was up 2.5%.

As companies look to improve their environmental, social and governance efforts, boardrooms are feeling the pressure to diversify their gender representation — and it appears that government regulation can be effective. According to Angela Berg, global diversity and inclusion consulting leader at Mercer, “more nations, especially in Europe, have implemented gender quotas for senior executives and boards, so they can benefit from more diverse points of view, drive change and enhance awareness of workplace gender issues.”

The Countries Where the Pandemic Has Lowered the Cost of Living

Note: Index shows estimated average expenses for a four-person family. The Rent Index estimates for renting one- and three-bedroom apartments in and outside of the city center.

Turkey, Colombia and Costa Rica are the top OECD countries that saw the biggest drops in cost of living between 2019 to 2021, according to BRINK analysis of numbers provided by online quality-of-life database Numbeo. 

While this may seem like a good thing, all three countries have struggling economies, which may explain the lower cost of living. Turkey is battling inflation and a weak currency, Colombia has crime and oil crises and Costa Rica is struggling with an impact on tourism.

Among the top 10 countries with higher index scores, South Korea, Germany and the United States have seen their rankings fall throughout the past 18 months. These are examples of countries that have done well economically throughout the pandemic. South Korea has seen exports rise 16.7% in 2021; Germany’s economy is forecasted to grow 3.1% this year; and the United States’ economy has shown relative resilience throughout the pandemic.

Insurer Premiums Are Aligning to Net-Zero Targets

Several major insurers and reinsurers are committing to transitioning their underwriting portfolios to net-zero by 2050, as part of the newly formed Net-Zero Insurance Alliance (NZIA). 

Launched in July 2021, NZIA includes eight institutions with over $400 billion in gross written insurance premiums and $130 billion in gross written reinsurance premiums. These figures account for 22% and 59% of global gross written insurance and reinsurance premiums among listed carriers, respectively. 

The reinsurance sector is highly concentrated. Consequently, net-zero commitments among a small number of the largest reinsurers place the reinsurance sector some way ahead of the insurance sector. In turn, this is expected to increase pressure on insurers to align their underwriting portfolios with net-zero. Over time, those that do not may find it harder to cede risks to net-zero-aligned reinsurers. 

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