Page 40 - 2016 State of the Market from AmWINS
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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.”
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