In the current market, it helps to have an exit route and an unlikely opportunity for M&A bankers is emerging – roles in insurance.
Insurance brokers in particular are on the acquisition trail (or indeed looking at disposals) and over the past six months have been steady building their in-house M&A and strategy teams. It’s not an uncommon move for investment bankers to take a strategy or consulting position within a large corporate, but it’s only recently that insurance brokers have been recruiting.
“We’ve seen more activity in the insurance sector this year than in the past two years, and our team is dedicating an increasing amount of time to this sector,” says Damian Guly, UK financial services deals leader at PwC. “Some insurance firms continue to rely on external sources of advice on M&A, while others are building their in-house resources. The more acquisitive brokers, in particular, have been either beefing up their internal teams or sometimes recruiting for the first time.”
Earlier this year, for instance, Towergate appointed Dan Saulter as its first group mergers and acquisitions director ahead of its plans for 10 acquisitions this year. Elanor James, who specialises in hiring for strategy roles within financial institutions at recruiters Sailing Stones, says that demand has picked up this year.
“Brokers have not traditionally had M&A or strategy teams in place internally, but this year there has been a definite uptake as more firms have gone on the acquisition trail,” she says. “However, larger insurance firms have had them in place for a number of years, but more recently have culled their teams slightly as activity has dropped in recent years.”
Giles, for instance, lost its head of M&A Hazel McIntyre – who joined from Royal Bank of Scotland in 2007 – and has yet to decide whether to replace her.
When investment bankers are considered
It’s obviously not all plain sailing, but recruiters suggest that – comparatively speaking – the job market is buoyant. Investment bankers, provided they have a background in FIG, are being considered for these positions by insurance firms.
“The insurance sector is decidedly more secure than investment banking currently, which is attracting more people across to these advisory and strategy positions,” says Mark Dainty, managing director of insurance-focused recruiters High Finance Group. “Brokers, general insurance firms and the Big Four consulting firms are all hiring.”
Matthew Strover manager on the insurance team at Morgan McKinley, adds: “Professionals coming from an investment banking background are highly sought-after for bigger teams where there are existing insurance specialists already in place. However for the smaller brokers, insurance knowledge will be a big requirement when hiring.”
One big stumbling block could be pay, however. While base salaries are comparable, insurance firms have typically been unable to compete on bonuses. Ironically, however, it’s the “very stubborn” high compensation ratios that are partially responsible for job cuts in M&A and, in the longer term, pay could be nailed down.
The right blend of skills
It would be wrong to assume it’s a completely seamless switch to move from M&A in investment banking to a similar, or more strategic, role in insurance.
“We’ve been placing more junior people from investment banking into these positions, because insurance firms are more willing and able to train them in the skills they might be missing,” says James. “M&A is only part of the role; it’s as much about strategy – competitor analysis and new product development, for example – and these are competencies not found in every senior M&A banker.”
What’s more, teams are more likely to be balanced by a range of backgrounds, to ensure the “right blend of skills” suggests Guly.
“Some come from accounting backgrounds and wouldn’t be as skilled at handling negotiation, others will be more transaction focused, others with financial modelling capabilities,” he says. “It’s rare that one person can tick all these boxes.”