COVID-19 may have delayed deal-making in the insurance sector and made process-related logistics more challenging, but it has not derailed deal activity. The pandemic has also introduced new marketplace dynamics that may favor consolidation over the longer term as carriers reexamine their competitive positioning and operational capabilities.
P&C carrier consolidation involving U.S.- and/or Bermuda-based buyers or targets as measured by aggregate deal value ended the third quarter of 2020 up sharply from the previous year’s pace, according to S&P Global Market Intelligence. Transactions involving U.S. broker or agency targets have slipped from the record levels of activity observed during 2018 and 2019, but a volatile political landscape could provide a strong tailwind for deal-making through the balance of the year.
The 11th Annual Insurance M&A Symposium, an interactive virtual event to be hosted on November 12th by S&P Global Market Intelligence in partnership with Deloitte, will explore the underlying market dynamics that have fueled activity to date in 2020, and the dramatic pandemic-related changes in the landscape that will continue to reshape the strategy and process behind industry consolidation. With the theme, “Intersections: A New Space for Action and Insights,” the event will explore how the rules of insurance M&A are being rewritten in these rapidly changing times across the P&C and life and health sectors. From incumbent carriers restructuring to aid their pursuit of inorganic expansion to startups seeing new opportunities to disrupt longstanding industry practices, COVID-19 has created new urgency around rethinking virtually every aspect of how business gets produced and underwritten. The emergence of insurance-focused special-purpose acquisition companies has introduced a new wrinkle.
For potential buyers and sellers alike, the pandemic has created challenges in conducting on-site due diligence, evaluating the risks associated with in-force business and forecasting future top- and bottom-line growth. The onslaught of business interruption claims disputes has only accentuated the ongoing surge in social inflation the industry has been confronting for the past several years. Our speakers and panelists, headlined by Bill Wheeler, President of Athene Holding Ltd., and Marty Young, co-founder and CEO of tech-enabled insurance provider Buckle, will offer their perspective on an industry at a crossroads.
For some, that’s meant going on offense to gain additional product line and distribution diversity. Allstate, through its $3.73 billion July agreement to acquire National General, will enhance its position in both the nonstandard auto business line and the independent agency distribution channel. State Farm, with the first acquisition of an insurance carrier in its history, will make similar accomplishments through the proposed addition of GAINSCO. Published reports regarding MetLife’s process for shopping its U.S. personal lines P&C business could allow other carriers to check any number of boxes regarding the size, scope and nature of their operations.
Macroeconomic pressures, meanwhile, could put a number of carriers on defense. Ultra-low interest rates, the emergence of existential questions for certain types of commercial entities, the high costs associated with necessary technological transformations and the potential permanence of dramatic changes in consumer behavior raise questions about business model sustainability. The need for operational and financial flexibility may never have been greater.
Join some of the insurance industry’s leading dealmakers from 10 a.m. ET on November 12th to learn more about their playbooks for these unprecedented times. Panelists include representatives of Allstate, Marsh & McLennan, Piper Sandler, SCOR, Allianz Global Corporate & Specialty, S&P Global Ratings, and more.
Register now to save your place.