Insurance is the darling of the private equity sector - there were more deals done in the UK & Europe in 2021 than ever before and that momentum shows no signs of abating.
The insurance broker space especially, is the hottest it has ever been, with PE looking to bring value creation through consolidation.
Bowmark Capital. through its Aston Lark investment. purchased 18 businesses in just 2021 alone to merge and create a broker powerhouse.
One does not need to dig deep to ascertain why.
Insurance businesses are built upon a strong pool of long-term customer relationships that deliver ongoing revenue, the opportunity for greater depth of connection, and little assets beyond people and technology.
Of course, consolidation is not enough to make the investment worthwhile. The promise of additional value creation through digital transformation brings real economies of scale to life. The ability to automate and personalise that which was previously high touch manual processes Is prominent, and it is the natural appeal for PE.
However, insurance businesses need funds to scale digitally. If they fail to do so when ever-greater numbers of customers are seeking services based mainly online for their convenience, they risk being left behind in a sea of 7 Inside Out: Is more fast paced. digitally agile competitors. The challenge Is to convert impetus into sustained solutions that are customer-friendly compliant and deliver efficiencies across an entire insurance business.
“Insurance is the darling of the private equity sector. One does not need to dig deep to ascertain why.
Insurance businesses are built upon a strong pool of long-term customer relationships that deliver ongoing revenue, the opportunity for greater depth of connection, and little assets beyond people and technology.”
Digital transformation provides increased opportunities to bring rapid profitability scale and simplification, and a few PF-funded wealth businesses are starting to capitalise on them.
Placing a comprehensive digital transformation strategy at the core of an investment thesis can ensure rapid value creation. make a business more easily scalable and deliver a thorough competitive advantage.
The upshot will be a data-driven digitally enabled and customer-centric sector set up for success.
These digitally centric businesses will provide the most significant market share and the strongest exit multiples The market is ripe for disruption and it is private equity that will fuel this change