It’s no secret that the UK insurance market is transforming, some of the insurance giants are gaining more market share and wiping out their competition at the same time. During the last 12 months, we have seen a constant stream of aggressive acquisition strategies, with mergers and acquisitions (M&As) dominating headlines.
High profile M&As in recent months
In June 2018, Insurer XL Group’s shareholders approved an agreement for AXA to acquire 100% of XL Group for 12 billion Euros. “Becoming a part of AXA provides unrivalled opportunity to accelerate our strategy with new strength and dimension,” said XL Group CEO Mike McGavick.
Several months later, the global professional services firm Marsh & McLennan had reached an agreement to acquire Jardine Lloyd Thompson Group in a deal that equated to $5.6 billion. In January this year, Arthur J. Gallagher agreed to buy 100% of Stackhouse Poland Group.
In early March 2019, insurance broker giants Willis Towers Watson (WTW) were poised to merge with Aon Plc, in what would have been the industry’s largest merger on record. However, it was later announced that Aon does not intend to pursue the combination.
Is there more to come?
Commoditisation of the UK’s insurer market is unlikely to subside. The rise of M&As has been pinned on several factors, including low-cost financing, the increasing importance of scale and the need for insurers to be sufficiently prepared for advances in technology and regulatory pressures, as well as being able to distribute globally.
Regulatory changes have included the implementation of the Solvency II directive, resulting in insurers being required to refine their business models. As a result and to comply with the capital requirements, one strategy is to aquire competitors to firm up the group balance sheet. Subsequently, we are likely to see more high-profile, global M&As becoming increasingly prevalent within the insurance market this year and in to 2020.
Combining old insurance wisdom with new technological innovations, Instant Underwriting can help insurers adapt to the changes the sector is facing, including helping them meet increasing insurtech demands.
Get in touch with Instant Underwriting today for more information about our tech-centred insurance products.