Among the largest insurance industry mergers and acquisitions of the past 10 years (from 2012 to 2022), only just over half have created value – but the percentage of property and casualty insurer M&A that has created value is 70%.
These insights were collected in a survey of carriers by ACORD, an industry standards organization. The survey focused on 80 transactions that had a deal value of $1 billion or more.
![Bill Pieroni of ACORD](https://arizent.brightspotcdn.com/dims4/default/d23c4c8/2147483647/strip/true/crop/772x1065+210+102/resize/740x1020!/quality/90/?url=https%3A%2F%2Fsource-media-brightspot.s3.us-east-1.amazonaws.com%2Ff0%2F04%2F336dd31041318127ff60c8cdfa0a%2Fbill-pieroni-acord.png)
The increase in value and business in the property and casualty sector of insurance is partly attributable to greater demand created by greater threats to property from climate change, said Bill Pieroni, president and CEO of ACORD. Of the insurance sectors covered – P&C, life, composite and reinsurance, life insurers had the lowest percentage of value creation – just 36%.
"In life insurance, there's been a paucity of demand, although there's been demand pick-up post COVID," he said. "Within this decade, there was still global financial crisis hangover. While higher interest rates benefit some, for life insurance, it increases surrenders."
ACORD's survey found four motivations for engaging in M&A transactions: improving the scale and scope of the business; expanding the business with new products, territories and customers; improving the insurer's capabilities; and diversification.
According to Pieroni, out of about 12,000 carriers globally, the top 200 account for about one-third of all premiums, and the top 100 saw their market share increase from 88% in 2003 to 90.4% by 2023. The top three carriers, in turn, saw their market share increase from 24% to 27% in that same time period.
While it is hard for the largest companies in any industry to grow, in insurance, the acquisitions do not help operational scale as much as they help informational scale, Pieroni explained. "What's important about the ability to use your scale and scope is not to buy products cheaper or to amortize fixed costs, but to really have data insights to underwrite more effectively and manage loss costs."
Overall, growth among the top 200 companies may be partly due to M&A, but a significant part of the growth is organic, according to Pieroni. Carriers' business operations are about 73% claims and 27% underwriting. Startup insurtechs looking to appeal to these large carriers
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