Common interest

As information technology becomes ever more important to the insurance industry, more and more companies in the IT sphere are seeing opportunities in insurance. It’s interesting, then, that a number of big money investors seem to be seeing investment opportunities in both.

Talk of the growing influence of private equity funds continues across various business sectors. As you may or may not recall, a couple of weeks back I posted an item here (Follow the Money, May 17) regarding the impact the new capital that’s been entering the insurance business in recent years might have on the way the industry does business.

The upshot, according to the group discussing the issue at the annual Harold H. Hines Jr. Memorial Symposium in Chicago, was that the new capital coming from private equity funds and others in the capital markets generally bodes well for the insurance business.

Regardless of the likely impact, the fact is private equity funds are being quite active in the insurance industry, and likely will continue to be so as long as it’s to their benefit to “play the cycle,” according to many industry insiders.

There are people with money to invest, and they’re looking to invest it where they see the possibility of strong returns. When those returns start to go away, so, presumably, will much of the private equity capital.

There are, obviously, always other places the private equity funds can put their cash. And apparently, in addition to the insurance business, the tech sector is one where they’re currently eager to invest.  Stories this week from the San Jose Mercury News and Reuters both addressed private equity funds’ recent interest in tech sector firms.

I spent a few days earlier this week at the annual conference of the Insurance Accounting & Systems Assn. in Minneapolis, where the trend evidently was much in evidence. More than one company among the various tech firms on the conference’s exhibit floor indicated they’d been visited during the gathering by representatives of private equity firms scoping out potential investment opportunities.


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