More partnerships with insurers, technology investments and divestments coming in 2021, says Bain


“We expect traditional insurers to continue to focus on cleaning up and strengthening their core portfolios in the near term. [and] peripheral companies in the portfolios will continue to be the subject of exploratory discussions on divestment, ”notes the Bain report. “This will create attractive opportunities for companies looking to strengthen their market positions or seek adjacencies.”

M&A opportunities will evolve as they did in 2020, Bain said, expanding, in part, through partnerships and initial technology investments and the sale of units that do not match core strategies. .

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Divestments have been the driving force behind most insurance mergers and acquisitions valued at over $ 1 billion over the past 5 years.

“Partnerships and investments will continue to be the primary approach for companies seeking new capabilities,” the Bain report explains. “That said, over time, as insurers become more confident of which capabilities will be most important in their ability to apply those capabilities at scale, we would expect to see increased interest from traditional insurers. to own and advance proprietary abilities.

Ongoing efforts by insurers to streamline and focus on core strengths will also keep mergers and acquisitions strong, Bain said. This trend was already well underway in 2020, the firm noted.

“2020 continued a multi-year trend in which global insurers are streamlining their businesses by streamlining their operations and redefining themselves with a narrower reach and a stronger core,” Bain said. “The pressure on profit pools due to low rates and increasingly complex requirements [carriers] to take a more critical look at the ability of their business units to create sustainable value. “

Bain noted that increased pressure on management attention and digital investment needs for core operations made less central business units “less and less attractive.” These factors have helped make divestments the determining factor in most insurance mergers and acquisitions valued at over $ 1 billion in the past 5 years, Bain said.

Relevant transactions in this category include Aviva continuing the sale of its Singapore business and Aviva Vita in Italy; The takeover by AXA of XL and the sale by AXA of its activities in Poland, the Czech Republic and Slovakia; and also AIG’s plan to separate its life and retirement activities to create a simpler business structure.

For some companies, however, doubling their core strengths can mean merging with a competitor. Bain cited Aon’s $ 30 billion bid for Willis Towers Watson as a prime example of this in 2020, as well as Allstate’s purchase of National General to expand into non-standard auto insurance and bolster its business. network of independent agents.

Bain’s comprehensive 2021 Global M&A report covers several areas beyond insurance.

Source: Bain & Co.


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