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Mergers & Acquisitions
Assessing the true worth of a company by looking behind the balance sheets at what is really going on is a vital part of any insurance M&A activity. EMB are highly experienced at analyzing (re)insurers’ profitability and liabilities as part of the due diligence process. We also look at wider business issues and whether a proposal would produce the desired strategic fit.
Our Approach to M&A
We apply many of the same methodologies to M&A as those used in other activities such as reserving, commutations and capital adequacy. Detailed analysis of liabilities, their likely development and variability will help to identify latent problems and measure a company’s underlying profitability. We do this by exploiting market-wide statistics and our own experience as well as a company’s own data. As part of this exercise, we study a company’s underwriting strategy, especially if there have been any recent changes, to assess likely impact on performance.
Financial models similar to those used in ICAs can also provide an important tool in measuring the risk inherent in a business, showing the full range of likely outcomes and their probabilities. As well as helping to assess the value of the company, the models play an essential role in developing strategy should the merger or acquisition proceed as well as aiding future dealings with regulators and ratings agencies.
Ensuring a Business Fit
Regardless of how the numbers stack up in theory, does the proposed deal make good business sense? EMB’s management consultancy team can consider the wider picture, weighing up such issues as economies of scale, corporate culture, potential synergies and other ‘soft’ factors that can determine whether or not a merger succeeds and in the event the deal proceeding, assisting the company to ensure that these factors are properly managed.
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