Insurance Underwriter - Mergers and Acquisitions
| Hanover CEO says smaller, specialty writers looking to M&A |  |
November 03, 2009 12:42 PM ET
By Jacob Geiger
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Hanover Insurance Group Inc. President and CEO Frederick Eppinger Jr. said there is a quiet storm of M&A conversations taking place within the insurance space, with most activity centered on smaller companies struggling with unprofitable underwriting and strained capital. "A lot of regional companies are getting killed with [combined ratios of] 115% or 120%," Eppinger said during the Q&A portion of the company's third-quarter earnings conference call. "So we see a lot of organic opportunities as they have to shrink and hunker down." Eppinger noted that this was the first time in 50 years that a weak pricing cycle has coincided with an economic downturn. He said small specialty companies have been hit the worst, and many of them are looking to consolidate with similar units. Eppinger does not, however, expect many large-scale deals. The CEO said Hanover does not need to make any deals, but he did not rule them out. "Our philosophy is I don't need them," he said on the call. "I don't need the transactions to do what we are trying to do, but we are constantly having conversations because there are wonderful teams out there contemplating their future, and I still think there is some real opportunity." | 
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