Strong 2014 M&A market in insurance distribution and services driven by desire for growth and scale
Hartford, CT (Mar. 16, 2015) – The improving economy, rising exposures, and the need for growth and scale drove the strong distribution and service sector M&A activity in 2014, according to a new study by Conning.
“The 2014 M&A markets for insurance distribution were characterized by historically high announced transaction volume, higher than average valuation multiples, and competition between strategic and financial buyers for premier properties,” said Gerard Vecchio, analyst at Conning. “Flattening property-casualty insurance rates, coupled with an improving U.S. economy and rising exposures, drove acquisitions to improve economies of scale, increase penetration into market niches, and realize international expansion. One unifying theme prevailed throughout the period: the need for growth.”
The Conning study, Global Insurance Distribution & Services Sector Mergers & Acquisitions: Vying for Domination in 2014, tracks and analyzes both U.S. and non-U.S. insurance industry M&A activity across distribution and services sectors. Specific transactions are detailed, and trends are analyzed across both sectors.
“In the insurance service sector in 2014, the market witnessed strong activity involving acquisitions of health care TPAs, property-casualty claims adjusters, and insurance IT firms,” said Steve Webersen, director of research at Conning. “M&A activity was driven by increased demand for “big data” and predictive analytics, and increased health care infrastructure needs resulting from the roll-out of the Affordable Care Act. Companies seeking to increase operating efficiencies used strategic acquisitions to accomplish this goal. In short, growth in margins and profitability drove an increased appetite for acquisitions.”
The Global Insurance Distribution & Services Sector Mergers & Acquisitions study is available for purchase from Conning via the company’s web site.
Conning is a leading investment management company for the global insurance industry, with more than $94 billion in assets under management as of December 31, 2014 through Conning, Inc., Conning Asset Management Limited, Cathay Conning Asset Management Limited, and Goodwin Capital Advisers, Inc. Conning’s unique combination of asset management, risk and capital management solutions and insurance research helps clients achieve their financial goals through customized business and investment strategies. Founded in 1912, Conning is focused on the future, providing clients with innovative solutions, leveraging its global capabilities, investment experience, and proprietary research. Conning is headquartered in Hartford, Connecticut, with additional offices in New York, London, Cologne, and Hong Kong.