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

2017 Teddy Awards

The Era of Engagement

The very best workers’ compensation programs are the ones where workers aren’t just the subject of the program, they’re a part of it.
By: | November 1, 2017 • 5 min read

Employee engagement, employee advocacy, employee participation — these are common threads running through the programs we honor this year in the 2017 Theodore Roosevelt Workers’ Compensation and Disability Management Awards, sponsored by PMA Companies.

A panel of judges — including workers’ comp executives who actively engage their own employees — selected this year’s winners on the basis of performance, sustainability, innovation and teamwork. The winners hail from different industries and regions, but all make people part of the solution to unique challenges.

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Valley Health System is all-too keenly aware of the risk of violence in health care settings, running the gamut from disruptive patients to grieving, overwrought family members to mentally unstable active shooters.

Valley Health employs a proactive and comprehensive plan to respond to violent scenarios, involving its Code Atlas Team — 50 members of the clinical staff and security departments who undergo specialized training. Valley Health drills regularly, including intense annual active shooter drills that involve participation from local law enforcement.

The drills are unnerving for many, but the program is making a difference — the health system cut its workplace violence injuries in half in the course of just one year.

“We’re looking at patient safety and employee safety like never before,” said Barbara Schultz, director of employee health and wellness.

At Rochester Regional Health’s five hospitals and six long-term care facilities, a key loss driver was slips and falls. The system’s mandatory safety shoe program saw only moderate take-up, but the reason wasn’t clear.

Rather than force managers to write up non-compliant employees, senior manager of workers’ compensation and employee safety Monica Manske got proactive, using a survey as well as one-on-one communication to suss out the obstacles. After making changes based on the feedback, shoe compliance shot up from 35 percent to 85 percent, contributing to a 42 percent reduction in lost-time claims and a 46 percent reduction in injuries.

For the shoe program, as well as every RRH safety initiative, Manske’s team takes the same approach: engaging employees to teach and encourage safe behaviors rather than punishing them for lapses.

For some of this year’s Teddy winners, success was born of the company’s willingness to make dramatic program changes.

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Delta Air Lines made two ambitious program changes since 2013. First it adopted an employee advocacy model for its disability and leave of absence programs. After tasting success, the company transitioned all lines including workers’ compensation to an integrated absence management program bundled under a single TPA.

While skeptics assume “employee advocacy” means more claims and higher costs, Delta answers with a reality that’s quite the opposite. A year after the transition, Delta reduced open claims from 3,479 to 1,367, with its total incurred amount decreased by $50.1 million — head and shoulders above its projected goals.

For the Massachusetts Port Authority, change meant ending the era of having a self-administered program and partnering with a TPA. It also meant switching from a guaranteed cost program to a self-insured program for a significant segment of its workforce.

Massport’s results make a great argument for embracing change: The organization saved $21 million over the past six years. Freeing up resources allowed Massport to increase focus on safety as well as medical management and chopped its medical costs per claim in half — even while allowing employees to choose their own health care providers.

Risk & Insurance® congratulates the 2017 Teddy Award winners and holds them in high esteem for their tireless commitment to a safe workforce that’s fully engaged in its own care. &

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More coverage of the 2017 Teddy Award Winners and Honorable Mentions:

Advocacy Takes Off: At Delta Air Lines, putting employees first is the right thing to do, for employees and employer alike.

 

Proactive Approach to Employee SafetyThe Valley Health System shifted its philosophy on workers’ compensation, putting employee and patient safety at the forefront.

 

Getting It Right: Better coordination of workers’ compensation risk management spelled success for the Massachusetts Port Authority.

 

Carrots: Not SticksAt Rochester Regional Health, the workers’ comp and safety team champion employee engagement and positive reinforcement.

 

Fit for Duty: Recognizing parallels between athletes and public safety officials, the city of Denver made tailored fitness training part of its safety plan.

 

Triage, Transparency and TeamworkWhen the City of Surprise, Ariz. got proactive about reining in its claims, it also took steps to get employees engaged in making things better for everyone.

A Lesson in Leadership: Shared responsibility, data analysis and a commitment to employees are the hallmarks of Benco Dental’s workers’ comp program.

 

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]