West Monroe's Annual M&A Research Reveals Bullish Outlook on Insurance Dealmaking

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Sep 17, 2024, 10:00 ET

Dealmaking expected to rise in insurance sector based on survey of private equity and insurance execs focused on AI and digital transformation

CHICAGO, Sept. 17, 2024 /PRNewswire/ -- West Monroe, a global business and technology consulting firm, today 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.

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. "For private equity firms, the insurance sector presents a unique opportunity to capitalize on digital transformation especially when it comes to maximizing the value from existing technology and Insurtech partners. Accelerating data investments delivers immediate value while also positioning firms for long-term organic growth and innovation."

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.

West Monroe is a market-leading advisor and longtime partner to the private equity industry, working regularly with 45 of the top 100 PE firms across the transaction lifecycle, from diligence to value creation to sale. For insurance clients, West Monroe has also been delivering quantifiable financial value for over a decade and recently announced plans to double its insurance practice by 2025.

About West Monroe

West Monroe is a global business and technology consulting firm that partners with clients to accelerate value through technology. We stand out by not just working for, but with our clients—engaging in the journey of co-creation and aligning our goals with theirs. Our expertise spans industry, strategy, people, process, and technology, ensuring rapid and impactful outcomes. Our employee ownership structure and mindset drive this mutual success. We are consistently celebrated as a top workplace by Fortune and USA Today, and as a leading consultancy by Forbes and Forrester. Learn how we can help accelerate your business at WestMonroe.com.

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SOURCE West Monroe Partners