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Mergers and Acquisitions... Insurance Q1 Overview

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Clare Eades Market Update, Financial Services, insurance...

2015 Q1 Insurance Overview 

Q1 of 2015 has been a busy period for the London Insurance Market with our clients looking to gain a competitive advantage through the route of Merger and Acquisition. One major Commercial agreement dominating conversations in coffee shops across the city is the unexpected merger of XL Group P.L.C. and Catlin Group Ltd. This will result in an extremely powerful specialty insurer and reinsurer with significant scale to boost profitability in the future, (approx $10 billion in net premiums written and10% share of ALL Lloyd's premium volume, this will boost Catlin which is already the largest syndicate at Lloyd's of London). XL has 4,000 employees across 22 countries and Catlin has offices in more than 50 cities and 2,300 employees and with this brings the HUGE task of integrating multiple lines of business, systems, processes and of course people. Insurers are people businesses and there is a significant risk of either company losing key members of staff from all areas of the business. A source suggests that there will be anticipated cost synergies of $200 million annually and a one-time integration costs of about $250 million, which is great news for the recruitment market. 

M&A activity subsequently drives the need to recruit specialist IT & Business Change contract practitioners who have previous experienceof Integration projects. Programme/ Project Management and Business /Technical Analysis skills are now in demand to drive a new XL Catlin Business Operating Model. This involves:
• Technical Analysis- GAP analysis of systems / business applications
• Business Analysis- Harmonisation of existing processes and products
• People Integration- changes to physical location and structure of teams / business units
The good news for Insurance Change Practitioners is that many companies operating in the Lloyd's market also are keen to diversify their business mix and gain scale, so more M&A activity at Lloyd's is likely in 2015.

A continual threat that's affecting the Insurance Markets are Cyber Threats; although financial services companies have done a lot to make themselves cyber secure, the most significant risks remain through their exposure from third party service providers, product suppliers, customers or in the case of banks and insurance companies, their borrowers. There is a gap between the nature of new threats and the capabilities available to detect attacks, monitor (and stop) unauthorized exfiltration, and secure information which few insurers have direct insights into the cyber liabilities surrounding intangible digital assets.This area of change is one in which Insurers are investing money in order to hire individuals to mitigate the risks. But as with the technical roles, these people are in high demand and small supply.