September 2014 22 Bermuda:Re/insurance+ILS
M&A:hotting up Bermuda:Re/insurance+ILS
Prospects for M&A appear good in the current soft cycle. Here, we explore the motivations behind such decisions and the challenges of execution.
T
he protracted soft cycle has once again raised the perennial question of M&A, with companies considering possible synergies as a means to offset growing market pressure. Execution is not for the faint-hearted however, with
challenges ranging from failures to acquire and inadequate due diligence, through to the departure of key personnel and a drag on future ROE; but conditions are nevertheless encouraging closer consideration of the merits of transactions.
“Reinsurers are facing an increasingly competitive environment,” explained Taoufik Gharib, director at Standard & Poor’s. “There is an excess of capital among traditional players, while the influx of third
party capital is further exacerbating reinsurance price declines. In the face of these conditions, reinsurers are trying to maintain market share or defend their competitive position.”
M&A is one potential lever that re/insurers are considering in an
increasingly tough environment. The slow pace of recovery in developed markets following the
financial crisis of 2008 and the limited role emerging markets can play in complementing peak geographies are further exacerbating conditions.
“Some re/insurers have focused on emerging markets in recent years, but insurance penetration remains low and the business tends not to be
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60