Dealmakers say Trump tariff turmoil dashes insurance IPO revival hopes

By Aidan Gregory

April 7 - (The Insurer) - Stock market falls triggered by last week's U.S. tariffs announcement have snuffed out any lingering hopes among bankers and deal advisers of a second quarter revival in insurance sector IPOs, along with any chance of secondary market offerings.

Swedish fintech Klarna paused its widely anticipated New York initial public offering, Reuters reported on April 4, in the latest blow to the wider IPO market.

Klarna's IPO had been seen as a potential catalyst for others, with Aspen Insurance, the Apollo-owned Bermudian insurer, also tipped for a listing in New York.

Aspen and Apollo declined to comment on the status of the listing on Monday.

The selloff triggered by U.S. President Donald Trump's tariffs continued in Asian and European trading on Monday, while the VIX volatility index surged to hit its highest level since the onset of the pandemic, making IPOs and share sales effectively impossible to pull off, dealmakers told The Insurer.

"It's not just Klarna. It's any IPO at the moment that will be suspended," said one equity capital markets banker.

While interest rate cuts and a revision of tariffs after negotiations with U.S. allies could give capital markets some relief, it is unlikely this will kickstart ECM deals soon, dealmakers said.

"We're going to need more than this to get stability and deal flow," the London-based banker added.

The first quarter of 2025 marked a continuation of the tepid insurance ECM volumes seen since 2022, with just $933.9 million raised, down from $12.12 billion in the fourth quarter of last year, LSEG data shows.

"The pipes are clogged with a lot of deals but there's not much conviction on the markets side to underwrite them," a New York-based ECM banker said.

"Part of that is the tariff uncertainty, because if they do go through there is a big impact on the bottom lines of companies if you sell into or out of the United States."

Arthur J Gallagher's $9.77 billion share sale in December to finance its acquisition of AssuredPartners accounted for 81% of global insurance ECM volume in the final quarter of 2024 and just over half of last year's total of $19.3 billion.

"Risks are amplified at the moment," said a strategic adviser close to the insurance sector.

Global insurance ECM volume topped $20.7 billion in 2021, the highest since 2017. Since then, deal flow has declined, with $11 billion of issuance in 2022 and $9.8 billion in 2023.

Europe has not seen any new insurance listings since 2021, during the height of the pandemic-era IPO boom, LSEG data shows, although an ECM banker in Paris said there was a pipeline of deals waiting for the right market conditions.

But any deals that had been expected after the Easter break are now likely to be put on hold until volatility subsides, dealmakers said, without forecasting when that may be.