Merger and acquisition activity in the insurance industry should increase for the rest of 2017 and several years to come, according to a report issued Tuesday by Willis Towers Watson P.L.C.
The report, Hitting the Right Targets: How Insurers Are Optimizing Their Capital Strategies and What This Means for the M&AS Market, prepared in conjunction with Mergermarket Ltd. surveyed 200 companies, including 85 in the property/casualty insurance industry: 28 markets in the Americas, 28 in the Asia-Pacific region and 29 in the Europe, Middle East and Africa region. There were also 30 reinsurers, 10 in each region.
“After 2015 — a year in which insurance deals defied gravity — M&A activity came back down to earth last year,” the report said. “However, we anticipate robust activity for the remainder of 2017 after a solid first half of year.”
Deals are predicted to continue and generally be larger rather than smaller.
“Looking ahead, we expect a healthy level of activity skewed toward the larger end of the market. In addition, the majority of respondents tell us that they intend to engage in M&A over the next three years,” the report said.
The report did show that firms are taking input from risk managers in capital strategy development, with 79% of respondents saying the risk management department has some responsibility for designing and executing the company’s capital management strategy, and 16% saying the risk management department was the most important in designing and executing the strategy.