‘No end in sight’ to insurance M&A: panel

Forces that have spurred consolidation, private investment and other M&A activity in the insurance and brokerage spaces are still going strong, and there are likely to be more deals on the horizon, industry executives told Insider US delegates yesterday. 
 
A lot of investment bankers say we should buy A, B, or C – that’s always something we look at,” Arch Capital CFO Francois Morin said at the New York event. Deals can help drive growth, he noted.  
 
“The difficulty with organic growth is it does take time,” he said. “As much as we think we can accelerate a few things the reality is it’s never easy to grow organically.”  
 
Morin spoke on a panel with Greg Williams, president and CEO of broker Acrisure, and Greg Wolyniec, president and CEO of Ascot Insurance US. All three companies have been involved in significant M&A activity as of late.  
 
Arch purchased mortgage insurance unit United Guaranty for $3.4bn in 2016. Acrisure has been growing at a rapid pace, with dozens of smaller broker acquisitions each year.  In 2016, the Canada Pension Plan Investment Board bought Ascot from AIG for $1.1bn.  
 
“From my perspective we haven’t seen any slowdown – in fact, our M&A pipeline is more full today than it’s ever been,” said Acrisure’s Williams. He noted that there are still around 30,000 independent brokerages in the US, just 5,000 fewer than there were in 2005.  
 
“If there’s an end in sight, we haven’t seen it,” he said. 
 
While consolidation pressures continue to mount, some buyers may be becoming more discerning. Acquisitions come with their share of challenges, including possible redundancies and corporate culture issues, the panelists noted. 
 
“It really starts with the culture the team has or the target has – how does it fit with us today?” said Wolyniec, discussing Ascot’s possible purchases of MGAs.  If the possible target is in “commoditised lines of business where it is heavily regulated, or in lines of business that tend not to make money – that’s not something we’re overly interested in.  
 
Despite some of the headaches associated with acquisitions, the purchase of United Guaranty has worked out well for Arch, said Morin. 
 
“For us, it truly was a home run,” he said. “It’s all good surprises.”