Execs question long-term logic of M&A


The long term benefits of the spate of mergers and acquisitions taking place in the industry at the moment has been called into question by some of Bermuda’s top executives.

Consolidation has largely been seen as a response to the influx of third party capital into te market, increased regulation and an ongoing soft market.

But some of the Island’s most senior insurance executives expressed concern about the effectiveness of this response, according to a new report by Xuber.

They remained unconvinced whether the rush towards becoming bigger as an organisation automatically leads to being better.

“I’m not sure that being a company with $10 billion of capital necessarily provides access to much more business than being a $5 billion sized company,” said Robert Johnston, president at Aon Benfield Bermuda.

“A merger situation it’s not just about scale – it’s also about creating efficiencies and widening the scope of your resources and capabilities.”

Brad Adderley, a partner at Appleby, added: “I understand an M&A deal when you buy a company with a book of business that you didn’t have access to, but I’m waiting to see if mergers of like-for-like companies in the end really make sense for the shareholders.”

Richard Clark, business development director at Xuber added that smaller organisations offered more flexibility and could employ greater innovation while larger entities would struggle to overcome legacy issues resulting from merger.

“The thing that we are constantly asked is how can we refresh the legacy systems as an asset and leverage the data better, rather than it being masked and buried in outdated systems and processes,” he said.

M&A, Aon Benfield Bermuda, Xuber

Bermuda Re