West Monroe's annual M&A research of private equity and insurance executives sees promising outlook.

West Monroe, a global business and technology consulting firm, has released its annual M&A signature research report, "Insurance M&A: Resilience, Digital Disruption, & Value Creation." The report, based on a survey of 250 private equity and insurance executives, reveals that despite broader market challenges, insurance M&A activity remains strong and is poised for continued growth. This resilience is largely driven by the sector's aggressive push toward digital transformation.

The report may be downloaded here.

While global M&A activity saw a significant decline of 18.4% in 2023, insurance M&A experienced a much smaller dip of just 2.3%. This positions the insurance sector for strong performance in the coming 12-24 months, with all respondents planning to do deals, and nearly 15% intending to complete five or more transactions during this period.

Another top finding from the research shows that digital transformation is expected to be a major driver of insurance M&A over the next 12-24 months as firms race to acquire digital capabilities and unlock new sources of value. Additionally, enhanced technology and insurtech capabilities are seen as critical to post-deal value creation, with over two-thirds (68%) of respondents highlighting these factors.

"M&A activity in the insurance space has held up incredibly well, even as the broader market has faced significant headwinds," said David Crofts, insurance M&A leader at West Monroe and co-author of the report.

Other top findings include:

  • AI is a priority: AI is transforming the M&A landscape, with 25% prioritizing it over the next two years due to its potential impact on data analysis and due diligence.
  • Value is created from tech: Enhancing technology and insurtech capabilities is considered the top priority for creating value, though dealmakers recognize that integrating IT systems and internal processes remains a significant challenge.
  • Talent wars are real: Talent shortages—particularly in data and tech expertise—present major challenges, specifically a lack of in-house expertise, leading many firms to pursue "acqui-hire" deals.

"The insurance industry is at a pivotal moment, where data, analytics, and AI are transforming not just operations but the very foundation of value creation," said Peter McMurtrie, partner in West Monroe's insurance practice and co-author. "While the opportunities for growth are immense, challenges such as integrating IT systems, modernizing data platforms, and building a future ready workforce remain significant. Those who can effectively harness these digital tools will be well-positioned to lead the industry forward."

The report, titled "Insurance M&A: Resilience, Digital Disruption, & Value Creation," surveyed 250 private equity and insurance senior-level executives in Q2 2024. Of those, 130 were based in the United States and the remaining 120 in Europe and the UK. All respondents had assets under management of $300 million to $5 billion.

SOURCE: West Monroe

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