2014 Insurance M&A Outlook

Momentum continues to build

A report from Deloitte US

Entering 2014, many insurers are well capitalized and are trying to optimize ways to put that capital to work, including by mergers and acquisitions (M&A).

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For the past few years, insurance companies have spent a considerable amount of energy improving their bottom lines by cutting costs. Now many are turning more of their attention to generating topline profitable growth, both organically and inorganically.

Entering 2014, momentum continues to build for increased insurance company M&A. The worldwide economy has begun to improve. Many insurers are fairly well capitalized and are trying to optimize ways to put that capital to work, including M&A. There are potential buyers with readily available funds; among them, public entities, mutual insurers, PE-backed firms and independent brokers. Additionally, rate increases which have been taking place across the board for a couple of years may be moderating, dampening an important source of topline profitable growth for commercial carriers and increasing the attractiveness of inorganic growth opportunities. Also, given the stock market's rise in 2013 and poor start in 2014, more firms may conclude that valuations are peaking and it's time to sell.

Leading insurers are conducting strategic business reviews to assess their current product, customer service and go-to-market capabilities and their core and non-core markets; figuring out where they want to (and don't want to) grow; and making deliberate decisions on how to achieve their objectives — including the increased role M&A might play. Those companies that have decided to utilize M&A as a growth driver are strengthening their business development function, taking the pulse of the market and actively communicating their desire for acquisitions.

This report  from Deloitte US examines the current state of global insurance industry M&A activity and the top issues facing companies in 2014 including:

  • Economic and market activity
  • Regulatory uncertainty
  • Investment activity by private equity firms
  • Capital management
  • Buyer/seller expectations
  • M&A capability building by strategic buyers
2014 Insurance M&A Outlook: Momentum continues to build
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