NU Online News Service, June 20, 1:52 p.m.EDT

While insurers and non-insurers cite consolidation andstrengthening competitive position as the reason for mergers andacquisitions, insurers say they are more successful in carrying outthis objective, according to a survey from Towers Watson.

The global professional-services company finds 66 percent ofnon-insurers and 62 percent of insurers say strengthening theirplace among the competition was the main reason for their mostrecent M&A.

Yet, 62 percent of insurers say the M&A transaction was“highly successful” in strengthening their competitive edge,compared to just 31 percent of non-insurers, Towers Watsonadds.

“In most instances, especially in the insurance industry, whenit comes to M&As, one company’s loss is indeed anothercompany’s gain,” says Jack Gibson, Towers Watson’s managingdirector of global mergers and acquisitions.

“Another insurance company that might be devoted to the businessline that is being sold could make the acquisition and strengthenits focus and industry position. In turn, the larger financialentity can use the revenues from the divestiture to invest in itsmore streamlined business—basically a win-win for both companies,”he adds.

Acquisitions are as common in and out of the insurance industry,but mergers are more common outside of the industry (22 percentcompared to 7 percent), says Towers Watson.

Continuing with reasons why M&A activity occurs, 31 percentof respondents say cost-structure optimization, though non-insurerscite this as a reason less frequently, says Towers Watson, addingthat although managers in the insurance industry are more likely tobe involved with the integration team, U.S. insurers do not givemanagers the support they need to develop operational and culturalelements of the M&A.

Beyond the strategic and financial reasons for M&A, insurersneed to focus operational and cultural elements for the transactionto succeed, Towers Watson advises.

More than 200 managers—100 from the insurance industry—took partin the survey, says Towers Watson.