The new deal: Insurance transformation with strategy-aligned M&A

Insurance transformation with strategy-aligned M&A

Greater alignment between M&A, corporate development and strategy needed to drive long-term value from deal activity for insurers

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The new deal: Insurance transformation with strategy-aligned M&A

New technologies, new competitors, new regulations and changing customer behaviors are creating tremendous opportunities, and posing significant risk to legacy insurance business models. This is true structural change, not just a cycle. To succeed in this dynamic environment, organizations are reevaluating their portfolio of business and rationalizing their global footprint to strategically determine ‘where to play’ and ‘how to win’ in the future. One of the immediate consequences of this trend is the expected rise in deal activity.

To find out how this shift towards strategy-aligned M&A is influencing deal activity, we commissioned Mergermarket Group to interview 200 insurance M&A decision-makers across all segments and regions.

In ‘The New Deal’ we explore the need for greater alignment between corporate development, M&A activities and corporate strategy. Interviews with leading insurers globally confirmed that this approach will be critical to evaluating the ‘strategic fit’ of their M&A activities, partnerships and venture capital investment opportunities.

As insurers formulate their M&A strategies for the year ahead, we believe the following trends will shape their deal activity:

  • Cross-border activity will increase as insurers worldwide seek to diversify their geographic risks and earnings profile.
  • Portfolio rationalization and strategic repositioning of businesses by larger insurers is expected to drive global M&A activity.
  • Greater alignment of corporate strategy and M&A objectives will provide an edge to buyers as competition for deals rises.
  • The hunt for innovation will increasingly shape insurers’ rationale for doing deals.

Our research suggests that this will require a different mindset. In particular for those lacking the internal capabilities and an enterprise-wide M&A playbook to enhance and deepen their due diligence, deal evaluation, and post-deal integration/separation processes. The report provides insight into how mergers and acquisitions (M&A) could help the industry drive future growth and establish new relevance with consumers, investors and shareholders.

© 2017 KPMG Huazhen LLP — a People's Republic of China partnership, KPMG Advisory (China) Limited — a wholly foreign owned enterprise in China, and KPMG — a Hong Kong partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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