Insurance case study

What was the context?

A private equity firm decided to start investing in European insurers and initiated a discussion with a player disposing of a life insurance book of business. The buyer’s M&A team needed insurance expertise to help them analyze the transaction. They wanted to assess financial and technical risks related to the target’s operations, appreciate the regulatory implications and prudential requirements, and have an opinion on the reasonableness of the price of the transaction.

What did SwissThink do?

With their knowledge of the European insurance markets, SwissThink experts have summarized the pros and cons of engaging in such a transaction. They have shared their views of the local market dynamics and regulatory environment and carried out an analysis of the target’s features, such as business position, solvency, profit and cash generation abilities, product and reserve risks. They also provided their views on the profit assumptions included in the pricing of the acquired business.

What is the benefit to the client?

The main benefit for the buyer was to achieve a holistic understanding of the risks involved by the transaction through an analysis of the target and the influence of the operating and regulatory environment in which it operates. It helped them weigh these different considerations within their decision making to fine-tune their offer, carry the deal negotiation on more solid grounds, and optimize the risk/return of the transaction.