Mergers and Acquisitions Strategy and Performance of Uap Old Mutual Insurance Company

Abstract

Various studies have been done on mergers and acquisitions by different researchers leading to diverse finding on the impact they have on performance of an organization. Although mergers are not the only contributor to high firm performance, scholars argue that it is a strategic way to gain an advantage and perform better than their peers in the industry. This study investigated the effect of mergers and acquisitions strategy on performance of UAP Old Mutual insurance company and that formed the objective of the study. The study used a case study of the company. Primary data was collected by use of an interview guide and secondary data was collected by obtaining information from financial statements of the company from their websites as well as industry information available on the AKI website. From the secondary data, the study was able to look at the expenses, gross written premiums, loss ratios and profit realized. Data was analysed using content analysis. The findings of the study were that the performance of the company improved as was seen in the increase in total income by 1.15% to 19.4 billion after the merger as compared to before the merger. The loss ratios of the company also decreased in 2016 compared to previous years indicating an improvement in performance. By focusing on the customer, the internal business processes, the financials, learning and growth, the organization was able to improve their performance in the period after the merger. The study gave the following recommendations: organizations undergoing mergers should ensure to find a way to incorporate the existing personnel without having to lay off many employees. Another recommendation is to ensure that the systems are integrated as soon as possible so as to reap the synergies arising from a merger. The main limitation of the study was the respondents not being willing to provide information for fear of revealing too much information and exposing company secrets. This was mitigated by the researcher having proof that information was purely for academic purposes by virtue of a letter from the university. It impacted the research in that the information provided was based on observations and experience during the period. Further research can be done in future using a different methodology such as regression analysis showing cause and effect in the same context but after several years to find out how the merger is doing and whether time factor has contributed to changes in findings. A similar study can be done to investigate the effect of mergers and acquisition on performance using a similar methodology but in a different context and in a different industry.