Insurers are relying on acquisitions to transform businesses

By The IJ Staff | June 19 2018 01:30PM

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A new report from KPMG International released June 19 has found that insurers, faced “with sluggish industry growth and agile new competition,” are actively pursuing acquisitions and partnerships to transform and grow their businesses.

The report, Accelerated evolution – M&A, transformation and innovation in the insurance industry, found that 80 per cent of insurance executives surveyed expect to seek one to three acquisition targets or partnership opportunities during the next three years.

Transforming organizations for the future

“The majority of insurers are intending to make acquisitions that could transform their organization for the future, rather than merely enhance their current business and operating models,” says KPMG International. Of the 200 insurance executives surveyed globally, more than 60 percent said transforming their business or operating model would be the key factors driving acquisitions, whereas only 21 per cent identified enhancing their current model as the key factor, says the report.

"Insurers are competing for market share in a slow-growth environment, that is experiencing an influx of dynamic new insurtech players," said Laura Hay, Head of Global Insurance for KPMG International. "They know they can't rely just on organic growth to meet their objectives, so alliances and acquisitions become essential as insurers look to engage with customers in new and different ways, and gain access to innovative operating capabilities and technology infrastructure to reshape their business and drive future growth."

North America expected to see most M&A activity

The insurance executives surveyed expect to see the most M&A activity in North America over the next three years, especially the United States. Meanwhile, Asia-Pacific is projected to be the region where insurers have the most partnership opportunities, and Western Europe is expected to drive relatively more divestiture activity, the report found.

To learn more, consult the report on KPMG’s website.

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