M&A Activity

M&A Growth in 2017

Data from the first half of the year shows a healthy appetite for mergers and acquisitions.
By: | August 29, 2017 • 2 min read

The first half of 2017 saw robust growth of M&A activity.

Deal value more than tripled to $10 billion, compared to $2.9 billion in the first half of 2016, according to PrincewaterhouseCoopers Corporate Finance LLC’s “U.S. Insurance Deals insights 1H 2017.”

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“When you think about the insurance industry, you have to remember there are a lot of smaller deals happening without announced deal values. There is a lot of activity that occurs behind the scenes,” said John Marra, U.S. Insurance Deals Leader and Global FS Deals partner of PwC.

“There’s a lot of capital out there looking for opportunity in the insurance industry, and it’s a slow, sometimes complex process to get deals announced and completed,” he said. “There was a little bit of a pause last year, at the end of 2016 — third and fourth quarter — and due to the success of closed deals in the prior year or two, more deals came out at the start of this year.”

“The brokerage trend continues, as big players are investing where they can. Based on what we saw [in the first half of the year], I think the main question is ‘Who’s going to come to market?’” — John Marra, U.S. Insurance Deals Leader and Global FS Deals partner of PwC

A total of 249 insurance deals were announced in the first half. Insurance broker deals were most active at 90 percent of deal volume, reported PwC.

The largest deal announced in the first half of the year was the acquisition of insurance broker USI by an investor group, including private equity firm KKR and Canadian pension fund CDPQ, for $4.3 billion.

John Marra, U.S. Insurance Deals Leader and Global FS Deals partner, PwC

“The brokerage trend continues, as big players are investing where they can. Based on what we saw [in the first half of the year], I think the main question is ‘Who’s going to come to market?’” Marra said.

“A number of players came to the market at the end of last year. It got others asking, ‘should we be an acquirer?’ ‘Should we be acquired?’ These are key decisions being made,” he said.

Among the key M&A trends, the life sector led the market in deal volume, while property/casualty contributed most to deal value.

“New capital continues to drive annuity and life business. The P&C side is a little different — premium and profitability growth are hard to come by,” said Marra, “so opportunities remain for small- to medium-size companies to build much-needed scale through consolidation.”

In the life and annuity sector, opportunities exist for insurers to exit capital-intensive or non-core businesses with plenty of investor interest in closed blocks and a narrower product concentration.

PwC predicts a healthy appetite for deals to continue through the second half of the year. One such example is Oak Hill Capital Partners, a private equity firm, acquiring The Carlyle Group’s Stake in EPIC Insurance Brokers & Consultants. EPIC is a retail P&C insurance brokerage and employee benefits consultant valued at $977 million.

The acquisition will give Oak Hill a controlling equity position in EPIC and enable EPIC to continue its organic growth strategy. The investment is expected to close in the third quarter of 2017, another example of a continued robust market. &

Autumn Heisler is a staff writer at Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

This senior risk manager values his role in helping Varian Medical Systems support research and technologies in the fight against cancer.
By: | September 12, 2017 • 5 min read

R&I: What was your first job?

When I was 15 years old I had a summer job working for the city of Plentywood, mowing grass in the parks and ballfields, emptying garbage cans, hauling waste to the dump, painting crosswalk lines.  A great job for a teenager but I thought getting a college degree and working in an air-conditioned office would be a good plan long term.

R&I: How did you come to work in risk management?

I was enrolled in the University of Montana as a general business student, and I wanted to declare a more specialized major during my sophomore year. I was working for my dad at his insurance agency over the summer, and taking new agent training coursework on property/casualty risks in my spare time, so I had an appreciation for insurance. My dad suggested I research risk management for a career, and I transferred sight unseen to the University of Georgia to enroll in their risk management program. I did an internship as a senior with the risk management department at Sulzer Medica, and they offered me a full time job.

R&I: What could the risk management community be doing a better job of?

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We need to do a better job of saying yes. We tend to want to say no to many risks, but there are upside benefits to some risks. If we initiate a collaborative exercise with the risk owners — people who may have unique knowledge about that particular risk — and include a cross section of people from other corporate functions, you can do an effective job of taking the risk apart to analyze it, figure out a way to manage that exposure, and then reap the upside benefits while reducing the downside exposure. That can be done with new products and new service offerings, when there isn’t coverage available for a risk. It’s asking, is there anything we can do to reduce the risk without transferring it?

R&I: What emerging commercial risk most concerns you?

Cyber liability. There’s so much at stake and the bad guys are getting more resourceful every day. At Varian, our first approach is to try to make our systems and products more resilient, so we’re trying to direct resources to preventing it from happening in the first place. It’s a huge reputation risk if one of our products or systems were compromised, so we want to avoid that at all costs.

We need to do a better job of saying yes. We tend to want to say no to many risks, but there are upside benefits to some risks.

R&I: What insurance carrier do you have the highest opinion of?

I’ve worked with a number of great ones over the years. We’ve enjoyed a great property insurance relationship with Zurich. Their loss control services are very valuable to us. On the umbrella liability side, it’s been great partnering with companies like Swiss Re and Berkley Life Sciences because they’ve put in the time and effort to understand our unique risk exposures.

R&I: How much business do you do direct versus going through a broker?

One hundred percent through a broker. I view our broker as an extension of our risk management team. We benefit from each team member’s respective area of expertise and experience.

R&I: Is the contingent commission controversy overblown?

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I think so. The brokers were kind of villainized by Spitzer. I think it’s fair for brokers and insurers to make a reasonable profit, and if a portion of their profit came from contingent commissions, I’m fine with that. But I do appreciate the transparency and disclosure that came out as a result of the fiasco.

R&I: Are you optimistic about the US economy or pessimistic and why?

David Collins, Senior Manager, Risk Management, Varian Medical Systems Inc.

While we might be doing fine here in the U.S. from an economic perspective, the Middle East is a mess, and we’re living with nuclear threat from North Korea. But hope springs eternal, so I’m cautiously optimistic. I’m hoping saner minds prevail and our leaders throughout the world work together to make things better.

R&I: Who is your mentor and why?

My Dad got me started down the insurance and risk path. I’ve also been fortunate to work for or with a number of University of Georgia alumni who’ve been mentors for me. I’ve worked side by side with Karen Epermanis, Michael Rousseau, and Elisha Finney. And I’ve worked with Daniel Dean in his capacity as a broker.

R&I: What have you accomplished that you are proudest of?

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Raising my kids. I have a 15-year-old and 12-year-old, and they’re making mom and dad proud of the people they’re turning into.

On a professional level, a recent one would be the creation and implementation of our global travel risk program, which was a combined effort between security, travel and risk functions.

We have a huge team of service personnel around the world, traveling to customer sites to do maintenance and repair. We needed a way to track, monitor and communicate with them. We may need to make security arrangements or vet their lodging in some circumstances.

R&I: What do your friends and family think you do?

My 12-year-old son thought my job responsibilities could be summed up as a “professional worrier.” And that’s not too far off.

R&I: What about this work do you find the most fulfilling or rewarding?

Varian’s mission is to focus energy on saving lives. Proper administration of the risk function puts the company in a better position to financially support research that improves products and capabilities, helps to educate health care providers and support cancer care in general. It means more lives saved from a terrible disease. I’m proud to contribute toward that.

When you meet someone whose cancer has been successfully treated with one of our products, it’s a powerful reward.




Katie Siegel is an associate editor at Risk & Insurance®. She can be reached at [email protected]