Scale and Primary Product-Market Focus Seen as Key to Success
(Hartford, CT) August 3, 2010 — Post-Glass-Steagall insurance-banking combination strategies had been under review by participants even before the financial crisis, and analysis of the performance of these combined entities during the crisis and recession will drive clearer focus on those strategies with the greatest likelihood of success, according to a new study by Conning Research & Consulting.
“Even before the financial crisis, the notion of financial supermarkets that had gained currency following the repeal of Glass-Steagall had begun to fade in the face of discouraging early results,” said Terence Martin, analyst at Conning Research & Consulting. “Wholesale integration of large-scale banking and insurance operations had proven both complicated and ultimately distracting, and early experiments began to unravel. At the same time, successful strategies for less-ambitious combinations began to emerge and some worked quite well through the financial crisis.”
The Conning Research study, “Life Insurance and Banks: All About Focus” analyzes performance of combined insurer-bank entities through the financial crisis and identifies the successful combination strategies and likely factors for future success.
“In our review of the performance of insurance-banking combination strategies we identified two key determinants of success,” said Stephan Christiansen, director of research at Conning. “Scale mattered, as larger combined players performed well, while small insurers with small bank units underperformed as they tried to manage these two very complex businesses. Most importantly, successful players seemed to be those who retained a primary market focus in either insurance or banking, and established the secondary service offerings to deepen the relationship with their core clientele.”
“Life Insurance and Banks: All About Focus” is available for purchase from Conning Research & Consulting by calling (888) 707-1177 or by visiting the company’s web site at www.conningresearch.com.
About Conning Research & Consulting
Conning Research & Consulting is a division of Conning, a provider of asset management and insurance industry research and consulting services to insurers. Conning Research & Consulting has published independent insurance industry research for 50 years, including market coverage of 30 segments of the industry in addition to industry forecasting and identification and analysis of major strategic issues. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and provides in-depth analyses on a wide range of industry products and issues. Conning is headquartered in Hartford, CT.