The new deal: Strategy-aligned insurance M&A | KPMG | GLOBAL

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

The new deal: Strategy-aligned insurance M&A

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

Greater strategy alignment need to drive long-term value from insurance deal activity.

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.

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