Insurance megadeals: preserving value in a record year of M&A - PwC report

Published at 00:01 AM on 12 September 2015

With record levels of volume and size in insurance sector M&A activity during the first half of 2015, a PwC report out today sets out why alignment with overall company strategy and preservation of value are key to pending and future mergers. “Insurance 2020: On track for the payback, Realising megadeal potential” outlines the ways in which insurers can address the basics of deal-making in order to withstand the complexities and challenges of large acquisitions.

The report highlights challenges facing the insurance industry in the midst of a flurry of megadeal M&A activity, including:

The risk that deal strategy could become defined by size rather than suitability and fit.

  • The possibility that a technology or telecommunications giant could seek to acquire an underwriting platform and ready-made market share to align with its own analytics and distribution capabilities.
  • Sufficiency of deal strategies to face the heightened size and complexities of “megadeals”.
  • Board challenges around competing in an increasingly consolidating marketplace.
  • The risk that non participation in the current M&A wave could make companies vulnerable to takeover themselves.

PwC underlines the importance of board level ownership for the evaluation and delivery of deal objectives. With the industry transforming, finding ways to sustain growth and keep pace is vital. By focusing on the basics with a clear vision of how and where their organisations intend to compete, boards can fully realise the role M&A can play in reinforcing their competitive platform. Equally important is perfecting corporate communications – ensuring investors, employees and customers understand the deal objectives, necessary integration activities, and responsibilities involved.

James Tye, PwC insurance Deals partner, commented:

“Whilst the strategic and economic rationales for consolidation in the industry have been well established for a number of years, no one could have foreseen the rapid acceleration and succession of insurance megadeals, in particular in the P&C space, within such a short period of time. 

“There have been different triggers for each deal, but collectively they have established significant momentum in the market for M&A, and further increased focus from boards considering their companies’ own positions as potential acquirers or targets, given the rapidly changing competitive landscape.

“The scale of recent transactions naturally creates potentially greater complexities and possible pitfalls.”

 

Arthur Wightman, PwC Bermuda territory and insurance leader, commented:

“Acknowledging these challenges and tackling them head-on drives the best chance of success, in particular where bold decisions are being taken in response to today’s M&A market.  Decisions need to be fully informed with those responsible being assigned and accepting accountability, from board level through to business unit leaders driving the operations, for the evaluation and delivery of deal objectives. These megadeals can propel businesses ahead of competitors and have the potential to reshape the industry.”

Ends                                                                                    

  • James Tye and Arthur Wightman are available for interviews before and during the Monte Carlo Reinsurance Rendez-vous. Please contact Ellie Raven on +44 (0) 207 804 3663, +44 (0) 7525 925 830 or [email protected]
  • ‘Insurance 2020: On track for the payback, Realising megadeal potential’ can be found here: http://pwc.to/megadeals

About PwC
PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
 
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
 
©2015 PricewaterhouseCoopers. All rights reserved.


Twitter
LinkedIn
Facebook
Google+

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

« PwC acquires Ellis Financial Systems Ltd to help clients meet new tax information reporting requirements | Homepage | Cyber insurance market set to reach $7.5 billion by 2020 – PwC report »

  • Contact us
  • +44 (0) 20 7213 1768

Specific and out of hours contacts