In a new report entitled “Accelerated evolution – M&A, transformation and innovation in the insurance industry”, KPMG International has revealed that more and more insurance companies are trying to uproot competition by acquisitions or partnerships.
KPMG analysts surveyed 200 insurance executives from around the globe to gain insight in M&A, strategy, and innovation approaches. They found that 80% of the insurance executives surveyed said that they expect to seek between one and three acquisition targets and/or partnership opportunities over the next three years.
Majority of the respondents said they were mulling acquisitions as a means to “transform” their organization for the future, instead of merely adding to their current business and operating models. Over 60% of survey participants said transforming their business or operating model would be the key factors driving their M&A activity, while only 21% said enhancing their current model was the key factor.
Other key findings of the report include:
- A majority of insurance executives are looking for inorganic opportunities outside their country of domicile – 66% expect to conduct cross-border deals, while 32% say they expect deals to be focused domestically.
- North America – particularly the US – is widely expected by survey participants to have the most insurance M&A activity in the coming three years.
- Only 10% and 7% of participants said that they are “extremely likely” to find a deal that is a strategic fit for their business and operating models, respectively.
- 72% said their deal sourcing objectives are not highly aligned with their corporate strategy.
- 72% of surveyed executives rated their capabilities for evaluating an M&A target’s strategic fit as “moderate” to “low”.