Munich partners with Bosch. Collective Health. This week in insurance tech.
Huge M&A news today as AXA agreed to acquire XL Group for $15.3B.
Here are a few notes on the deal:
P&C vs. health: Health (12%), Protection (23%), and P&C Commercial (17%) represent around half of AXA’s revenues. While XL fits into AXA’s growth strategy in commercial P&C, it’s interesting to see AXA make the P&C-focused deal after a number of moves more in line with its evolving “payer-to-partner” healthcare strategy.
Recall AXA’s last M&A deal was for venture-backed US health benefits startup Maestro Health. And back in December 2016, AXA CEO Thomas Buberl sounded the alarm on the tech threat to insurers’ health businesses. But with its acquisition today, Buberl called the deal “a strategic opportunity to shift its business profile…to predominantly property and casualty business.”
Growth markets? In November 2017, AXA earmarked six “high potential” countries, four of which were in Asia. But in 2017, 40% of XL’s premiums were in North America, indicating Asia growth was less a focus for the mega-deal.
Shift in attitude toward size: Early last year, AXA’s Buberl noted the groupwas interested in acquisitions of €1B to €3B, telling the FT: “Small M&A makes no sense, but very large M&A makes no sense either, as we already have global scale.”
Looks like he changed his mind. Instead, AXA joins AIG and Phoenix with insurance M&A deals of $4B+ in the first three months of 2018 already.
Startup investments? Both AXA and XL have actively been operating strategic venture arms, though don’t have any co-investments to date. AXA’s VC arm is among the top 50 most active CVCs (it also operates Kamet, a €100M incubator).
Food for thought:“We are entering a new Golden Age because we have many new risks, and we can still make a big difference in customer service. Service will be the biggest disruptor of our industry.” – Thomas Buberl, AXA Investor Day 2017
Smart home consolidation
Earlier this month, Amazon acquired smart doorbell maker Ring for over $1 billion. The move came as the latest in a wave of consolidation hitting the smart home industry, after Swedish lock giant Assa Abloy acquired smart lock startup August Home in December 2017.
Despite mixed success, insurers have been actively been partnering with and investing in smart home startups over the last few years.
While insurers have invested in a broad set of smart home startups, newer investments have primarily focused on water leak detection and monitoring. In a review of home claims from 2009 to 2015, 19% were for non-weather-related water damage vs. 6% for theft.
See which insurers have invested in smart home startups here.