In spite of an uncertain and turbulent year, several key acquisitions in the insurance and InsurTech sector took place. Here are five ones to watch.
Stock market volatility, inflation and rising interest rates and increasing financing costs mean the execution of transactions is more challenging. That’s according to a report from Deloitte, published mid-way through 2022.
Despite this, there are some key factors driving M&A activity which persisted throughout the year. For example, a Clyde&Co report suggested that the InsurTechs that have done well and grown in size in recent years are now getting to the stage where they are either attractive targets for incumbents or have the capability to seek out acquisition deals themselves.
Moreover, the increasing demand for digital and streamlined insurance services is putting pressure on traditional insurers to modernise, and one way to do this is to partner or acquire InsurTechs with new technologies. This was certainly the case for many of the deals in 2022, and will also likely be true of 2023 also.
Here are some of the notable M&A deals that took place in 2022.
JAB makes more moves in pet insurance with AGILA take-over
JAB’s European pet insurance platform Pinnacle Pet Group (PPG) announced its plans to acquire German pet insurance provider AGILA Tierversicherung.
This is the second pet insurance move from JAB in a month. The company entered into an agreement to acquire all of Fairfax’s interests in US-based Crum & Forster Pet Insurance Group, in a deal worth $1.4bn.
The financial details of the transaction were not disclosed. The deal will also see WERTGARANTIE Group become an investor in PPG.
A subsidiary of WERTGARANTIE, AGILA provides health insurance for cats and dogs in Germany and Austria.
With its support, JAB said PPG will be built into a “leading Pan-European platform for animal insurance through strategic investments and organic growth.” The WERTGARANTIE Group will also continue to support PPG German activities as a relevant shareholder.
The transaction is expected to close in Q4 2022, subject to closing conditions.
Patrick Döring, CEO of the WERTGARANTIE Group, said, “The strategic partnership between Pinnacle Pet Group, JAB and WERTGARANTIE Group will transform the prospects for AGILA.
Liberty Mutual Insurance in AmGeneral take-over
Liberty Mutual Insurance acquired Malaysian insurer AmGeneral Insurance Berhad (AmGeneral).
AmGeneral is a motor and general insurance company serving the Malaysian market, the company has underwriter RM1.52bn gross written premiums for the financial year 2021/2022.
AmGeneral was previously 51%-owned by AmBank and 49%-owned by Insurance Australia Group. Liberty Insurance Berhad has acquired 100% of the shares of AmGeneral, and AmBank continues to hold a 30% interest in the business through the consideration shares they received as part of the deal.
As part of the transaction, the prospective merged entity will enter into an exclusive 20-year bancassurance partnership with AmBank to distribute general insurance products.
The AmGeneral and Liberty Insurance Berhad operations will, at a subsequent date, be formally merged, at which time it is expected that the combined entity will become the largest auto insurer and a leading general insurer in Malaysia.
American Financial Group (AFG) acquires Verikai
At the start of 2022, Insurance holding company American Financial Group (AFG), acquired Verikai, a machine learning and artificial intelligence (AI) company, in a $120m deal.
Founded in 2018, Verikai is an InsurTech leveraging alternative data and machine learning to change the way the insurance industry views risk. Focused primarily on underwriting efficiency, Verikai provides insurance companies with risk reports to optimise the underwriting process.
The company’s most recent round of funding was a $6m Series A round in 2020, led by ManchesterStory. Verikai will continue to be led by Jeff Chen, its current president and CEO.
Carl H. Lindner III, AFG’s co-CEO, believes that artificial intelligence and machine learning will continue to have a significant impact on the insurance industry; the group sees Verikai as an “effective leader” in the use of these technologies.
Lindner III added that AFG has been very selective and intentional with its investments in the InsurTech space, and often doesn’t invest directly in InsurTech entities, but Verikai presented an unmissable opportunity.
“Verikai will continue to operate as a stand-alone company to serve its insurance clients. We are also pleased that Great American Insurance Group will benefit from Verikai’s predictive risk tool and unique Marketplace solution as it enters the medical stop loss business, with a primary focus on small and underserved risks.”
Majesco acquires InsurTech Global IQX
Majesco, a provider of cloud insurance software solutions, acquired SaaS-based InsurTech Global IQX.
Global IQX delivers solutions to insurers designed to streamline, automate and transform how they do business.
The acquisition will see Global IQX be pre-integrated with Majesco Policy for the Life and Accident/Health (L&AH) segment and will continue to integrate with other policy solutions as needed by customers.
Majesco said the L&AH segment is prioritising and shifting to a more robust, AI driven underwriting workbench.
The company explained that the combined solution portfolio of Global IQX and Majesco will elevate underwriting and enrollment capabilities, with AI capabilities that give insurers a competitive edge both strategically and operationally.
The Global IQX solutions include Underwriting Workbench for quoting and rating, proposals, and renewals; Enrollment Suite with onboarding, employee self-service portal, individual medical underwriting, quoting, and rating, proposal, and renewal; Intelligence Suite using AI with AI census scrubber, new plan design recommender, workload recommender and lead scoring.
Munich Re acquires InsurTech apinity to drive digitalisation
Munich Re acquired apinity, a start-up that supplies application programming interface (API) solutions in the form of Software as a Service (SaaS) for the insurance industry.
apinity combines a software platform with a marketplace for sector-specific API services. Munich Re acquired 100% of the shares in apinity GmbH. The deal came into effective 4 October 2022.
The two parties agreed not to disclose the purchase price.
The acquisition sees Munich Re employ all current personnel, and maintain both existing business relationships and the technology platform, including all established third-party services.
Munich Re said that unlike conventional API management solutions, apinity is based on solid business-oriented user experience, while also handling critical business processes such as contract management, monetisation, and subscription management.
The global insurance provider added that apinity will make it far easier for insurers in particular to participate in the key area of open insurance.
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