Non-life insurance
Mergers and acquisitions
Successful merger and acquisition deals are those which enable one or both of the buyer and the seller to realise key strategic objectives and enhance shareholder value. Choosing the right deal to maximise value added requires detailed analysis of opportunities. Ensuring that the price paid is reasonable given the likely benefits and the potential risks of the acquisition is of paramount importance to any buyer.
Watson Wyatt offers you first class, independent advice at all stages of a merger or acquisition. We have extensive experience of providing advice to sellers and purchasers of life and non-life insurance companies, from the initial formulation of an M&A strategy through to final implemetation.
Advising the purchaser
In the initial stages of formulating an M&A strategy and locating potential target companies, we can help you:
clarify your business objectives and the part that M&A is intended to play in achieving these analyse potential new markets set the criteria to be used to identify and evaluate potential target companies identify companies that are likely to meet these criteria investigate possible target companies to assess their profitability and future prospects.
Once you have identified a potential acquisition, there follows the key period of investigation and negotiation. In this stage, we can assist by carrying out an independent review of the proposed purchase, including a full actuarial due diligence exercise. This may include some or all of the following elements:
an assessment of the operational performance of the target company including both qualitative and quantitative input development of a business plan, including the quantification of synergies and potential cost savings assessment of the potential capital requirements review of the adequacy of technical insurance reserves, including:
outstanding claims reserve unearned premium reserve additional unexpired risk reserve future claims-handling expenses future reinsurance bad debts.
a review of the employee compensation and benefit structures operated by the target company including an actuarial assessment of pension liabilities and expense assessment of the arguments and counter-arguments that may be used by the parties to the transaction during negotiations assistance in negotiations over both price and contractual terms participation in meetings with regulators and preparation of any regulatory submissions required.
Many deals fail because of ‘people problems’. If managed well, significant returns can be achieved in terms of faster integration, lower deal costs, better customer focus and greater productivity. In conjunction with our human capital consulting colleagues, we can help you achieve this. We can provide assistance by:
analysing partner or target company cultures and performance management systems supporting human capital integration across the enterprise redesigning and implementing a new human resource strategy for the ‘post-deal’ organisation.
Advising the seller
If you are considering selling an insurance business, we can:
help you consider the options available, which might include, for example, selling only part of the business, selling blocks of business in a piecemeal fashion, or selling future business only and placing the existing portfolio in run-off review the operation of your business and advise on structural change that may help to maximise the sale price identify potential purchasers and contact them on your behalf to assess their level of interest prepare an appraisal of the company, including the elements of its value, for distribution to potential purchasers or publication in a sale prospectus participate in meetings with potential purchasers and provide them with additional information assist in negotiations over price and contractual terms.
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