KPMG: major Canadian insurance M&As likely in 2018

Published: July 4, 2018

Updated: September 19, 2018

Author: Luke Jones

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Throughout 2018, insurance industry analysts have predicted global companies will pursue mergers and acquisitions (M&A) during the next three years. In Canada, consolidation is likely to come sooner, with a prediction of a major carrier M&A this year.

Georges Pigeon, a partner with KPMG’s transaction services division spoke to Canadian Underwriter, claiming from the top 10 property and casualty (P&C) insurers, “it could be expected that a few of them are looking at mergers and acquisitions intensely… My expectation would be that some of them would contemplate an acquisition in the coming years if the right opportunity comes along.”

Pigeon was speaking about the recently published KPMG International report, titled Accelerated evolution – M&A, transformation and innovation in the insurance industry. The report surveyed insurance executives and found 80% “expect to seek one to three acquisition targets or partnership opportunities over the next three years.”

“The Canadian P&C marketplace has seen over the last 10-15 years what I would term a major acquisition of a carrier,” at an average of one major deal a year, Pigeon said. This trend is likely to continues in 2018 and in the next three years. The only potential stumbling block is whether “anyone wants to sell, and that will drive whether we see another transaction,” Tim Prince said June 28 in an interview.

The report found 80% of executives asked believe they will be pursuing between one and three acquisitions or partnership over the next three years. Most executives say they have plans for an acquisition that could “transform” the shape of their current business. More than 60% says looking for organizational transformation is a key reason for looking towards M&As.

“Insurers are competing for market share in a slow-growth environment, that is experiencing an influx of dynamic new insurtech players,” said KPMG International head of global insurance Laura Hay. “They know they can’t rely just on organic growth to meet their objectives, so alliances and acquisitions become essential as insurers look to engage with customers in new and different ways, and gain access to innovative operating capabilities and technology infrastructure to reshape their business and drive future growth.”