A study by insurance investment management firm Conning & Co., reported in a recent article from Business Insurance, sees another big year of mergers and acquisitions in the world of insurance. How does this affect you, a member of our elite captive insurance industry?
According to the report, the volume of merger and acquisition activity in the insurance industry more than quadrupled in 2015, (from $43.8 billion to $194.9 billion in 2014), with additional major activity expected, particularly in the property/casualty sector. Those are big numbers. Some of the increase was driven by several large transactions, including Ace Ltd. and Chubb Corp.’s deal, according to the report entitled: “Global Insurer Mergers & Acquisitions in 2015, The Big Bang”, but the report also stated there were some sectors facing strong external challenges, such as medical professional liability.
The healthcare transactions were motivated by a number of factors, including the Affordable Care Act. “Growth in government-subsidized programs, such as Medicaid and Medicare Advantage, accompanied by the retreat of traditional employer-based plans in favor of high-deductible plans and exchanges, generated pressure to acquire Medicaid and Medicare providers and build scale to generate efficiencies,” according to the report. We have certainly seen the impact on healthcare captives in the same vein. Clearly, mergers and acquisitions will put continued pressure on the captive arena as both the traditional and larger captive community seek these same efficiencies. The report predicts continued M&A activity in the insurance world this year as well, so hold on to your hat (or captives).
And speaking of acquisitions, I want to take this opportunity to introduce our new part-time staffer here at VCIA, Dave Rapuano. Dave will assist with VCIA communications and webinar initiatives and is a recent graduate of Champlain College with a degree in Graphic Design and Digital Media. His skills and experience will be a wonderful asset to our great team – welcome Dave!
Thank you all very much, and I look forward to hearing from you.