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Insurance M&A Activity Continues Apace

The expected uptick in insurance M&A activity continues with the acquisition of SPARTA by Catalina Holdings.

Following a survey last year that indicated three-quarters of insurance executives expected more M&A activity in the industry this year, Towers Watson's latest survey on the subject released today finds a similar percentage saying they are considering one.

"Lately we’ve seen a strong trend toward accelerated activity that has featured bold, transformative moves into new geographies, product lines and distribution systems," said Jack Gibson, Towers Watson’s global lead for insurance M&A, in a statement. "Many of these recent deals have been well received by both buyers and sellers, bringing significant value, attractive platforms and superior talent to the marketplace.”

Among the deals this year include today's announcement of the acquisition of SPARTA Insurance Holdings by Catalina Holdings, a Bermuda-based company established nearly a decade ago to consolidate non-life insurers. SPARTA's key lines of business include specialty program and risk transfer alternatives.

[More on the growing M&A trend: Insurance M&A Spikes This Year, Fullfilling Predictions]

The most popular drivers for acquisition insurers cited in the Towers Watson survey were "seeking an opportunistic purchase" (64%) and "bolt-on acquisitions within an existing geography and segment" (55%). The SPARTA acquisition seems to serve both purposes for Catalina, whose chairman and CEO Chris Fagan said in a statement, "The acquisition of Sparta adds significantly to our operations in the North East of the US, and follows quickly after our recent acquisition of Alea North America."

“Each insurer has its own philosophy about acquisitions, but there are a few parameters all acquirers should observe,” Gibson added in the Towers Watson release. “Foremost, insurers need a clear M&A strategy developed in advance that aligns with their broader corporate strategy. Those that do are most likely to find a strategic fit that makes sense from both a near- and longer-term perspective."

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Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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