Insurers Meeting Talent Needs; Excess Capital Continues to Fuel Mergers and Acquisitions
OLDWICK, N.J., August 11, 2015—A.M. Best has released new quarterly survey results that look at talent management in the insurance industry, as well as capital management and the increased merger and acquisition (M&A) activity.
The Best’s Special Report, titled, “A.M. Best Spring 2015 Insurance Industry Survey,” says at the aggregate level, the industry as a whole did not identify itself as having a problem meeting its hiring needs. However, steps taken and obstacles presented varied. One noteworthy finding is that there is a potential talent drain as the industry is having a challenging time attracting younger agents.
Additionally, A.M. Best re-examined its last quarterly survey results that were released in April, on the industry’s M&A views. A.M. Best believes this re-examination to be appropriate given the recent rush of announcements of many large deals across industry segments. Some highlights from the survey are as follows:
A significant number of survey respondents (nearly 90%) have been able to fulfill their hiring targets over the past 18 months, regardless of industry segment. However, respondents identified those 44-55 years of age as the main age for their existing agents—nearly 70% of the agent population.
A short bench
Potential issues arise as less than 20% are under 44 years of age, showing the lack of bench strength. When asked about obstacles to meeting hiring needs, a little over 40% of the respondents said the insurance industry is perceived by prospective candidates as not being entrepreneurial enough (i.e., too boring).
- The main driver of M&A activity for 2015, according to roughly 30% of respondents is the strategic use of excess capital, with 26% noting meeting growth targets as a main driver. The health segment is strategically using its excess capital to increase business diversification, partially to meet targeted growth objectives. The property/casualty and life/annuity segments also viewed the strategic use of excess capital as a main driver in addition to meeting targeted growth objectives.
- Many insurance sectors are faced with slow premium growth and are looking at various solutions. The biggest drawback to addressing slow growth was the risk of losing underwriting discipline, according to 43.7% of the respondents. Other drawbacks include the cost of acquiring additional distribution, inability to further reduce pricing and a real lack of innovation perceived available for the existing product offerings. Despite the slow-growth environment, 43% of respondents have made no significant changes to existing product offerings.
- Insurers’ interest and use of insurance-linked securities, as part of their risk management efforts within the property/casualty segment, were not as a whole, big as just about 3% admitted either issuing or purchasing these securities over the past three years, with diversification the main driver.
- To access a copy of this report, please visit here.
