While 66% of non-insurers and 60% of insurers cited strengthening competitive position as an objective for their most recent M&A, 62% of insurer respondents said the transaction was highly successful in this regard, while only 31% of non-insurers responded in kind in this survey of more than 203 managers in U.S. organizations, 100 of whom are from the insurance industry.
Additionally, cost structure optimization was the third most common reason given by insurers for the transaction (31%), while non-insurers mentioned this far less frequently (17%).
The survey also found that mergers are more common outside the insurance industry (22% compared to 7% for insurance). However, acquisitions themselves are roughly comparable (80% for non-insurers versus 83% for insurers).
"In most instances, especially in the insurance industry, when it comes to M&As, one company's loss is indeed another company's gain," said Jack Gibson, Towers Watson's Managing Director, Global Mergers and Acquisitions. "Another insurance company that might be devoted to the business line that is being sold could make the acquisition and strengthen its focus and industry position. In turn, the larger financial entity can use the revenues from the divestiture to invest in its more streamlined business — basically a win-win for both companies."
Turning to the integration process, insurance industry people managers were more likely to provide advice to an integration team, compared to people managers in organization outside the insurance industry (31% versus 19%); however, those outside the insurance industry were more likely to be a member of an integration team, compared to insurance people managers (29% versus 21%). In other aspects of the integration process, there are only slight differences between insurance and non-insurance people managers.
"While insurers naturally focus on the strategic and financial aspects of mergers and acquisitions, they also need to give just as much attention to the operational and cultural elements that can ultimately affect the success of the transaction over time," Gibson said.
In addition to the findings outlined above, three insurance industry executives – Michael Lee, President and CEO of Tower Group; Rob Leary, CEO of ING; and Costas Miranthis, President and CEO, PartnerRe Ltd.; discuss their views of insurance industry M&A.
About the survey
The full Towers Watson study on managerial roles in a corporate transaction was conducted in October 2010 and includes responses from 700 people managers (those responsible for managing five or more employees) in medium to large organizations that went through an M&A within the past three years. The participants represent a wide range of industries and are based in the United States, Canada, China, Germany, Japan and the United Kingdom. However, the insurers are all U.S.-based.