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Carve-outs factor to two-thirds of $ 1 billion plus offers by 2020



Insurance companies are using divestitures to help them focus on their core business, according to a report Tuesday from consulting firm Bain & Co.

These targeted divestments, or "carvings", have accounted for 70% of mergers and acquisitions of insurance over the past five years, Bain said.

"In 2020, a multi-year trend continued where global insurance companies streamline their business by simplifying operations and redefining themselves with a narrower scope and stronger core," said Bain.

By 2020, 67% of offers were over $ 1 billion of the "carve-out" variety, with 33% stand-alone transactions, Bain data showed.

For example, Axa SA completed the sale of its operations in Poland, the Czech Republic and Slovakia to Uniqa Insurance Group AG in October 2020, for example, following the 201

8 acquisition of XL Catlin Ltd.,

Other acquisitions made it possible for buyers to build and strengthen core businesses, such as Aon PLC's $ 30 billion acquisition of Willis Towers' Watson PLC, Bain said.

Private equity buyers have shown continued interest in insurance acquisitions, Bain said. "There seems to be no end to private equity's appetite for insurance companies", with private equity accounting for 14% of transaction volume by 2020.

Elsewhere, the number of private technology investments from insurance companies decreased to 96 in 2020 from 132 in 2019, data also showed that the total number of investment contracts grew to 377 from 314 in 2019.

Bain expects the trend of maturing non-core businesses to continue until 2021.

We expect older insurance companies to continue their focus on cleaning up and strengthening its core portfolios in the short term, ”said Bain. "Peripheral companies in portfolios will continue to be the subject of exploratory divestiture talks", which in turn "will create attractive acquisition opportunities for companies wishing to strengthen their market positions or pursue frontiers."


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