Global growth
A period of intense mergers and acquisitions activity a decade ago has given rise to a number of dominant global players in the life insurance market. Intelligent Insurer investigates the conditions that allowed these companies to develop and the opportunities they present to reinsurers.
Others, such as Aviva, have grown mainly through joint ventures. And then there are those companies that found themselves quickly propelled to global status thanks to a frantic period of mergers and acquisitions around 10 to 20 years ago.
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“A good example of this is Allianz, which built up a significant operation inside Germany and then began to acquire companies outside of the country,” says Vasilis Katsipis, general manager of rating agency A.M. Best.
“Prudential followed the same formula, growing to become a major
player in the UK life insurance market over the course of a century. It then began to branch out globally, through the acquisition of companies such as Jackson National Life Insurance in the US.”
here are a number of ways for a life insurer to become a global success. Some have built their global presence steadily, over many years of carefully considered strategic and organic expansion.
But whilst M&A activity has been a major driver in growth over the
past decade for life insurers, market conditions—along with regulatory changes—have made it a less attractive option for the foreseeable future.
“Companies may continue with this strategy opportunistically, but I do
not believe that there will be a major drive for mergers and acquisitions activity in the next two to three years,” says Katsipis.
“One major uncertainty is around what the Solvency II capital
requirements will be—European insurers are likely to want to know what that level will be before they begin engaging in mergers and acquisitions again. However, there may be some activity from the large US life insurers, as we’ve seen recently with MetLife acquiring the international business of AIG.”
This means that, generally, all companies are trying to be more capital efficient and focused on their core business.
Summer 2011 | INTELLIGENT INSURER | 55
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