“Extraordinary animals, each in a heroic struggle against rivals and against the forces of nature, fighting for their own survival and for the future of their ‘Dynasties’."
This is the emotive tagline for the new BBC nature documentary series fronted by David Attenborough. But reflecting on 2018, it also sums up nicely the current state of play for the insurance sector in many ways.
The past 12 months have seen a number of major plays by businesses looking to create their own ‘dynasties’ in a bid to make themselves more relevant and put their own rivals on the back foot.
The year kicked off with Allianz linked with XL Catlin, only for Axa to step in and do the deal for the business in a move that shifted its business profile from “predominantly life and savings” to “predominantly property and casualty”, becoming the number one global commercial lines insurer based on gross written premiums at the same time.
Post-summer the insurance world was caught on the hop when Marsh and McLennan Companies bid for JLT, a deal that put some distance between itself and other broking super power Aon.
It was not only in insurance and broking that organisations sought to lay down a mark, with third-party administrator Sedgwick solidifying its dynasty by completing the acquisition of Cunningham Lindsey.
This trio of deals are among a number over the past year that have created bigger entities, highlighting a belief that in today’s world – bringing us back to BBC’s Dynasties – if you are not asserting you are king of the pride/pack, then you could be someone else’s lunch before you know it.
Especially given the forces of nature the insurance industry face – from globalisation to digitalisation – both cost efficiency and regulatory/political uncertainty play a role here too. As does the spectre of external interest from tech giants armed with data and customer service know-how that puts financial services to shame.
Few expect the M&A activity to slow down in 2019, although some of the drivers may not be the usual names, as evidenced by Post’s front cover story this month. When BGC president Shaun Lynn first went into Lloyd’s he admits to having a flash back to his formative career at the London Stock Exchange, and sees potential to disrupt insurance broking using his own experience, his employer’s balance sheet and a nose for a good deal.
2019 could well see more incumbent businesses enhance their own insurance dynasties through M&A. But others may look to Ed and decide that rather than be swallowed up by a traditional predator, it may make more sense to buddy up with an interloper.
Here’s to an interesting 2019. Let the curve balls begin.
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