More insurers are seeking merger and acquisition (M&A) targets, buoyed by growing economic momentum and the need to achieve scale as competition intensifies.

There were 186 completed deals worldwide in the first-half of the year, compared with 180 in the previous half, law firm Clyde & Co says in its mid-year update.

“Deal-makers are feeling renewed confidence, buoyed by strengthening economies in the US and Asia, greater regulatory certainty in China and the Middle East, and the need to pick up the pace in Europe as the risk of a chaotic Brexit looms large,” Global Head of Corporate Insurance Andrew Holderness said.

“The market remains uber-competitive and generating growth a perennial challenge, so M&A can provide potential synergies on reducing the cost base, build scale and access new customers.”

Axa’s $US15.3 billion ($20.7 billion) acquisition of XL Group and AIG’s $US5.56 billion ($7.5 billion) takeover of Validus Holdings are a sign of more consolidation to come in the reinsurance sector.

Clyde & Co says the traditional monoline reinsurer model is struggling to stay relevant.

“There is a seismic shift under way in the reinsurance market,” Mr Holderness said. “In jurisdictions around the world large reinsurers are striving to get closer to their customers by increasing their footprint in the primary market, either organically or through acquisition.

“Carriers are looking to write risks at every level, be it from the direct side, reinsurance or retro­cession, and for that they need sufficient scale and balance sheet strength.”