Survey showing robust M&A activity also has a few surprises
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Global insurance merger and acquisition activity is likely to continue “at a strong pace,” according to the one of the authors of a recent Willis Towers Watson P.L.C. study.
“Overall when I look across the various markets, there seem to be signs that M&A activity will continue to be strong, and the trend we saw in 2015 will continue,” said Jack Gibson, managing director at Willis Towers Watson in New York and global leader for insurance M&A.
The study “Defying Gravity: Insurance M&A on the Rise,” released last week, showed the value of global insurance merger and acquisition activity hit a record high last year, with about $143.5 billion worth of transactions, about three times the value of deals in 2014.
Mr. Gibson said one of the interesting results was that 82% of the survey respondents said they wanted to make acquisitions, but only one-third said they're considering divesting operations.
The survey found that the most significant motivation for deals was the targets' “market position and customer base,” which was cited by 48% of both the property/casualty and life insurance respondents. For property/casualty insurers, that was followed by diversification in product lines, cited by 34% and the target's distribution at 28%.
The survey also found that 92% of the deals took place in regions where insurers had operations.
Mr. Gibson said that was somewhat of a surprise. “We have seen a recent trend of Asian insurers buying into the United States,” he said. “There have been several deals by Japanese and Chinese insurers buying in, and I expect some of those companies to expand. Over time there may be some other acquisitions, but it may take a three- to five-year time period,” he said.
The survey was based on the responses of 750 senior executives split evenly between the property/casualty and life insurance sectors. The companies surveyed last year for the study were spread evenly across the America, Asia and Europe Middle East Africa regions.
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