STEPHEN PROCTOR: Can I start by asking, what is the current state of the UK European M&A market?
ALEXANDER PEAKE: The story of the past couple of years has been one of geopolitical events and shocks, which have been quite unhelpful from an M&A perspective. First, we had the COVID epidemic, followed by Russia's invasion of Ukraine. We then had energy markets quite heavily disrupted. And since then, there's been a period of very high interest rates, all of which have contributed to poor market conditions for M&A.
With that said, since the start of this year, there's definitely been an upward trend in transaction volumes, and also size of transactions as well, which has been really positive.
I think one thing that was a slight dampener to all of this was Trump's tariff announcements earlier this year, where obviously, there was a certain amount of uncertainty from those announcements-- a number of transactions put on hold. A number of those have since died, or some have continued but have been restructured with a different new consideration.
So I think when comparing Trump's tariffs to the other geopolitical events, actually, I think there's been a more muted impact than we were expecting at first in that a lot of transaction teams have paused things, but I think that was only a month or a month or two blip. And actually, deal teams have got back to it, showing that their adeptness at finding solutions and working through this is a challenge rather than retreating.
STEPHEN PROCTOR: Thank you, Alex. What does this mean for the general insurance M&A market?
ALEXANDER PEAKE: I think our outlook is broadly one of positivity and optimism. With that said, we're still very much in a soft market. A lot of the market trends over this year, and the last few years, really, have really been driven by insurer behaviors out of that soft market dynamic.
So there's been a broadening of appetite, both in terms of jurisdictions and industries. So there's definitely a wider range of targets and transactions which are now insurable, which is great from a client perspective. There has also been moves to try and increase rates and finding ways of building on additional affirmative coverages to policies or enhancements in order to increase that rate slightly.
The final thing is that underwriters have looked at the underwriting process and seen where they can streamline it in order to manage costs, both streamlining council costs, but also on smaller transactions, looking to underwrite those maybe more efficiently.
STEPHEN PROCTOR: The WTW claims statistics show there's been more claims activity year on year. What have we learned from this?
ALEXANDER PEAKE: The thing to remember when looking at claims is that M&A is a very young area, in relative terms, at least. The increased claims activity, I think, really speaks to a slow maturing of the market. And obviously, that claims activity is an important test around the longevity of the product as a whole. Clients are increasingly becoming repeat buyers of the product. And claims is definitely an area of focus and a point of discussion when appointing underwriters on new bits of business.
I think from my perspective, where I really see a difference between the market-leading claims teams and the rest is around client service. Having good client service and kicking off processes in the right way often creates better outcomes, and, in particular, as a kick off call, something face to face, people putting faces to names. And that creates a less adversarial relationship throughout the claim, allowing parties to get to a solution quicker.
STEPHEN PROCTOR: Thank you, Alex. That was very interesting. And we wish you much success in continuing to bring new clients to FINEX. Finally, on a personal note, have you any particular plans for any holiday destinations?
ALEXANDER PEAKE: I would love to go to Patagonia. That's top of my travel list-- some amazing, amazing scenery there, and would be keen to explore it for myself.
STEPHEN PROCTOR: Thank you, Alex. That's all we have time for today. Please do join the next FINMAR Presents: Five Minutes with-- goodbye.
