Recent mergers and acquisitions in the global insurance industry have highlighted that firms are starting to look for more than size with their M&A activity.
A report from
EY has shone the spotlight on this new approach with over a third of insurers (37%) using M&As to acquire capabilities, not just scale, as they look to transform their combined businesses.
“What we are seeing here is a number of insurers are trying to futureproof their business,” Charlie Alexander, Asia-Pacific financial services transactions advisory leader told
Insurance Business.
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“Looking at how they add in new products and services, it is no longer just a scale play in their existing markets and existing business lines; they are using M&As as an opportunity to get new skills, customer sets, products.”
The industry push towards digital in particular is driving the need to acquire new capabilities as firms look to create a ‘best of breed’ business following an M&A transaction. Daryn Saretzki, Oceania financial services integration and separation advisory leader at EY, noted that firms are increasingly looking to use M&As to take their existing systems or digital presence to another level. As more incumbents look to partner or acquire insurtech firms, this trend should continue.
However, once an M&A is agreed, Saretzki stressed that employee engagement and management is key to ensure a smooth transition process.
“The employees are ultimately the ones that are going to support you through the process and retaining top talent and managing people both in the target and the vendor through this process is critically important,” Saretzki told
Insurance Business.
Customer experience also needs to be managed before, during and after an M&A as the deal may present industry participants with an opportunity to contact clients proactively, thus creating more touch points between insurer or broker and client.
Saretzki said that planning for any M&A integration is vitally important, regardless of deal size.
“The size and the scale of the integration aside, the same types of issues and matters need to be addressed,” Saretzki continued. “It doesn’t matter whether it is a small or big deal and certainly from a regulatory perspective the way that you are treated and managed, you need to go through the same processes.”
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