![]() The result is that companies can be both more proactive and more opportunistic at identifying potential acquisition targets and will be better prepared for negotiations and integration. It lays out well-defined themes and criteria that are explicitly grounded in strategy, builds conviction and alignment of stakeholders, and sets clear boundaries and integration plans. Furthermore, without a developed M&A blueprint, insurers are more likely to pursue ad hoc synergies around each target with hit-or-miss returns.Ī robust M&A blueprint addresses where, why, and how a company will undertake a systematic program of acquisition. Without such a blueprint, companies will find it hard to distinguish between through-cycle opportunities (during both upcycles and downturns) that are consistent with their corporate strategy and low-hanging opportunistic deals available in the marketplace that are not. Yet few of these rise to the level of what we would define as a fully developed M&A blueprint. we found that some believe they have relevant capabilities in place given their frequent engagement in M&A (Exhibit 1). Seven of the 12 respondents reported closing at least one or two deals per year over the past five years, with none of them characterized as large deals. In a recent informal poll of insurance executives who focus on strategy, business development, and M&A, 1 Our informal poll, completed in the fourth quarter of 2021, solicited input from 12 North American insurance executives, representing traditional carriers as well as newer entrants. But in our experience, many insurance carriers are facing that volume of activity with little more than the most basic framework describing the how and why of their M&A strategy. To support a programmatic approach to M&A, acquirers need to canvass a large number of potential acquisitions-as many as two to three times more than they did several years ago. Meanwhile, P&C carriers are likely to seek bolt-on deals of companies that enhance their presence in growth markets and offer attractive cross-cycle ROE. Life insurers face ongoing challenges to sustaining growth in core life and annuity businesses they also remain focused on improving ROE profiles by divesting or reinsuring legacy blocks. Deal making in the sector is likely to be brisk in the coming years as insurers seek to grow and diversify their earnings. It’s an approach insurers should consider. This article is a collaborative effort by Alex D’Amico, Oliver Engert, Jay Gelb, Sean O’Connell, Kurt Strovink, and Liz Wol, representing views from McKinsey’s Insurance and Strategy & Corporate Finance Practices.
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