Global reinsurance M&A and property and casualty in H1 2014 was boosted by companies attempting to enter new markets, according to A.M. Best.
M&A in the property and casualty and reinsurance industries “continued at a steady pace” in H1, with 35 transactions announced globally.
The disclosed volume of deals was round $5.6 billion, compared to approximately $10 billion for all 2013.
"Similar to that of the past few years, much of the M&A activity in the [property and casualty] industry during [H1] 2014 was driven by consolidation or companies attempting to enter new markets such as Asia and Latin America," said A.M. Best.
Although not included in A.M. Best’s figures, on 4 July the Swiss-based insurer ACE announced the purchase of the large corporate property and casualty insurance business of Brazilian insurer Itaú Seguros for almost $700 million. In 2013, Itaú Seguros' commercial business generated approximately $1 billion in premiums.
ACE's announcement implied that, once the deal is completed, Latin America will represent approximately 14 percent of its total premiums compared with about 8 percent of total premium in 2013—making ACE one of the major players in the region.
Many firms have also been prompted to offload underperforming or non-core operations due to a difficult environment characterised by low interest rates, increased competition and lower insurance rates.
A.M. Best stated that some insurers, “now understand that organic growth remains challenging at this stage of the cycle”, which makes acquisitions an increasingly attractive alternative to growing the business internally.
