Life - Articles - Life and health insurance M&A activity to accelerate in 2016


Merger and acquisition (M&A) activity in the global life and health insurance industry is expected to accelerate in 2016. However, the focus of deals could be on small-to-medium players - rather than big ticket acquisitions, according to research by Life Insurance International (LII).

 Citing data published by life reinsurer RGA in December 2015, since 2011, mergers and acquisitions within the global life and health insurance industry have grown at a compound annual growth rate (CAGR) of approximately 42%.
 
 Between 2011 and October 2015 RGA said acquirers focused on the three regions: North America - $34bn (55% of deal activity), Asia - $18.5bn (30% of deal activity) and Europe - $7.8bn (12.5% of deal activity).
 
 Asked about life insurance M&As in 2016, Robert Zilg, an independent insurance consultant and previously head of EMEA strategy and planning at MetLife, tells LII he expects "somewhat more" M&A activity in the life insurance market in 2016.
 
 In Zilg's view, although more M&A activity is likely in the life and health insurance sector during 2016, these are likely to be focused on small-to-medium sized deals, rather than big ticket deals.
 
 His comments follow Swiss Re Global insurance review 2015 and outlook 2016 / 17 report, which said some primary insurers will shed unprofitable or non-core business while others will look to grow through M&A, thus creating opportunities for transferring blocks of in-force business to reinsurers and specialised consolidators.
 
 The shift from West to East: Timetric analyst’s view
 
 Joel Dudley, financial services analyst at Timetric's Insurance Intelligence Center explains how the centre of gravity in insurance M&A has shifted from West to East in recent years.
 
 Dudley says: “Following the financial crisis, Western insurers engaged in a flurry of M&A activity in Asia's emerging markets. We are now seeing a reversal of this trend. Asian insurers, mostly based in Japan and China, are seeking to diversify into the US insurance market by acquiring mid-level insurance companies.”
 
 “For Japanese insurers, the US market represents a chance to establish themselves as global players. Earlier this month, the president of Nippon Life told The Japan Times that the company was seeking acquisitions in the US because it is "the largest market in the world".
 
 Dudley adds that in the same article, the president of MS&AD Insurance claimed that their purchase of Amlin had "placed the firm in a higher rank".
 
 He says: “With the outlook for Japan's life insurance sector remaining weak, establishing strong operations abroad may be one way for Japanese life insurers to avoid becoming acquisition targets themselves.
 
 “For Chinese companies, by contrast, diversification into the US market represents an opportunity not for growth, but for stability. China's turbulent domestic economy doesn't offer the stable long-term investment opportunities that life insurers need. As a result, Chinese insurers have been keen to snap up both real estate and insurance operations in the US. Anbang recently followed up its 2014 acquisition of the Waldorf Astoria hotel in New York by acquiring Fidelity & Guaranty Life, a US life insurer. China Life recently invested over $1bn in US warehouses.”
 
 Dudley concludes by noting as with Japan, these acquisitions are driven by recent regulatory change.
 
 For example, in 2014, he says the China Insurance Regulatory Commission passed new laws allowing insurance companies to invest up to 15% of their assets abroad.
 
 “So far, Chinese insurers have been cautious in experimenting with this new freedom. But if the forays of the likes of Anbang and China Life prove successful, we can expect far more outwards Chinese investment in the years ahead,” Dudley concludes.
 
  

Back to Index


Similar News to this Story

IPT receipts hit over GBP1 billion in November 2024
According to this morning’s HMRC data, Insurance Premium Tax (IPT) receipts reached £1.2 billion in November 2024, bringing the eight-month 2024/25 to
Healthy life expectancy data hint at post pandemic recovery
New figures published last week by ONS show Healthy Life Expectancy for younger age groups is lower than a decade ago although older ages have seen a
Treatments through PMI hit record in first half of the year
Over seven in 10 of all private health treatments are now being funded via PMI. Record H1 in 2024 for PMI-funded health admissions as employers expand

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.