The performance of the U.S. property & casualty insurance industry is more counterintuitive and potentially troubling today than ever before. And yet, across all products — including in personal and commercial lines — in a static market with paltry investment returns, in a soft pricing environment where price increases are hard to come by, and with year-over-year industry growth in 2011 of little more than 1%, most of the largest P&C carriers have continued to grow and profit. Unless you live under a rock like Rick in one of GEICO’s offbeat commercials, it is hard not to have noticed that the biggest auto … Continue Reading →

In spite of a global recession now heading into its fourth year, mergers-and-acquisitions (M&A) activity in the Property & Casualty (P&C) insurance industry continues unabated, extending the uptick that began last year. Including the IT services, software, and technology vendors that serve the broader insurance industry, more than 300 M&A transactions have already been completed. The majority of M&A transactions have taken place in the distribution space, where the 10 largest global retail and wholesale insurance brokerage firms have made the majority of all acquisitions. For the insurance companies themselves, the big have gotten and will continue to get bigger … Continue Reading →

After months of excitement, not much has changed in the exchange-consolidation merry-go-round. The SGX/ASX deal got scuttled thanks to Australian political forces playing the “national interest” card. The same could be said for the recently abandoned LSE/TMX deal, though that battle included an interesting twist, with large Canadian banks getting together to counter the British invasion with the creation of the Maple Group. The NASDAQ/ICE bid for NYSE Euronext looked to be the most interesting until it went out with a whimper thanks to strong antitrust concerns by regulators. While it is true that the combined entity would have had … Continue Reading →

For the London Stock Exchange (LSE), it has not been fun being the largest equities exchange in Europe over the last few years. Similar to other exchanges with any sort of global aspiration, the LSE faced two somewhat contradictory competitive forces: 1) Global exchange consolidation: Large exchanges have been extremely active, merging with each other to create a diversified, multi-regional mega-exchanges. 2) Local competition from small, nimble execution venues: Starting with the U.S. equities market, competition from ATSs has been fierce, more often than not leading to loss of market share for the incumbent exchange. Under this competitive environment, the … Continue Reading →

With today’s official announcement of the Deutsche Boerse acquisition of NYSE Euronext, what was unthinkable even a decade ago may become a reality. While regulatory approval for such a behemoth of a deal is far from guaranteed, the combined entity would certainly put a lot of pressure on other major exchanges with any level of global aspiration. How did we get here, and what is next to come? One could point to the demutualization of exchanges as the initial trigger for consolidation. As exchanges transformed themselves into for-profit public companies, the pressure for ever-higher revenues continued to build up. In … Continue Reading →