Cultural integration top concern for reinsurers: Xuber

Cultural integration is the top challenge reinsurers will face as a result of mergers and acquisitions (M&A) in the market.

This is according to a survey by Xuber, Xchanging’s insurance software business, which found that 95 percent of respondents viewed this as the major challenge.

This was followed by the integration of multiple systems (83 percent) and distraction from business as usual (80 percent).

Chris Baker, executive director at Xuber, said: “Bigger does not always mean better, and the mismanagement of the cultural integration between merged companies can ultimately undermine the potential value created.

“Fusing diverse company cultures and qualities can deliver immense value as both companies bring something unique and different to the table. Mergers and acquisitions create anxiety amongst employees, and both companies are keen not to lose a culture that works for them and is meaningful.”

The survey also found that respondents were divided over the actual impact of the current of M&A.

According to rating agency AM Best, in 2014 there were 50 international reinsurance companies which wrote more than $500 million of gross reinsurance premiums.

When asked to predict how many reinsurers will be writing $500 million or more in gross written premiums in 2017, opinions were mixed with 40 percent thinking there would be between 40 and 50, followed by 20-30 (23 percent), 30-40 (20 percent), more than 50 (15 percent) and 10-20 (2 percent).

“M&A will inevitably lead to fewer reinsurers, but an overwhelming 80 percent of those surveyed did not believe this would lead to less competition, while only 18 percent did believe the market would be less competitive.”