Page 40 - 2016 State of the Market from AmWINS

3480 | AmWINS State of the Market

FEATURED TREND:

MERGERS &

ACQUISITIONS

M&A activity in the P&C sector remains strong

2015 saw significant levels of merger and acquisition (M&A)
activity across all insurance industry sectors, with property
and casualty insurers representing a majority of the aggregate
2015 M&A deal volume. Even excluding the Chubb/ACE merger
– the segment’s largest-ever deal – P&C carrier deal volume
reached unprecedented levels, despite an approximate 20
percent decline in the number of deals between 2014 and 2015.
Insurance M&A markets remained active in the first half of 2016
but deal volume is down for P&C carriers.

“As interest rates remain at historic lows and carriers continue
to face downward pressure on insurance premiums, coupled
with record amounts of excess capital, insurers will continue to
turn to M&A to achieve growth, enter new markets, and improve
operational efficiencies,” says William Nichols, vice president of
business development for AmWINS Group, Inc. “While carriers
will use M&A as a way to achieve scale and diversify their books
of business, they are also looking to gain a better return on
equity in a slow growth environment.”

Industry experts predict consolidation among mid-sized and
large insurers will continue. They also point to an intensified
interest in financial technology (often referred to as “fintech”).
Increasingly, carriers are making “venture-style” investments
in (and in some cases acquisitions of) fintech companies to
augment their existing capabilities and take advantage of
potential technological disruption.

“Disruption has become the latest buzz word, but change
is inevitable for our industry and those who can identify and
adapt to change, while looking out for the best interest of the
insureds, will prevail,” says Nichols. “As a wholesale broker,
we spend a significant amount of our time thinking about
distribution and product. When you understand the needs of
both an underwriter and a retail agent, you can bring value to
the distribution chain and deliver the best solution to all parties
involved.”