With WellsCanning Acquisition, Consulting Firm Towers Watson Harnesses Insurance Biz

(October 4, 2011) — Consulting firm Towers Watson has acquired WellsCanning, an investment advisory firm specializing in the insurance industry.

“The WellsCanning team adds to Towers Watson’s insurance industry and investment resources that span both sides of the business ⎯ asset and liability ⎯ and strengthens our ability to provide investment advice to our clients at a time of unusual market volatility and regulatory change,” Christopher DeMeo, Head of Towers Watson’s Investment business in the Americas, said in a statement. “We are extremely pleased to welcome the WellsCanning team to Towers Watson.”

Valhalla, N.Y.-based WellsCanning Founder Karen Wells added: “We are pleased to join a global company that has such a strong position in the insurance industry. WellsCanning clients will gain access to Towers Watson’s consulting and analytical capabilities, and extensive research capabilities for asset managers, asset classes and regulations, among other areas.”

The acquisition by Towers Watson provides clients a greater breadth and depth of expertise to call on, the consulting firm’s spokesman Michael McNamara told aiCIO. 

Evidence showcasing the spike in activity in the insurance business comes from a March report from the Insurance Asset Outsourcing Exchange, which tracks newly outsourced investment mandates by insurance companies and investment managers. The report revealed that an increasing number of insurers are outsourcing management to third parties.

While outsourcing has been primarily utilized by smaller insurance companies due to lack of resources, the financial crisis has pushed larger companies to increasingly rely on third parties, the report showed. “It’s quite interesting,” David Holmes of consulting firm Eager, Davis & Holmes told aiCIO earlier this year from his office in Kentucky. “The smaller insurance companies have always had a perception—an accurate one—that they don’t have internal resources or expertise to manage general accounts in an effective way. Large companies thought they could do it internally. After 2008, that’s changed.”