M&A activity for P/C & reinsurance focuses on emerging markets


Global merger and acquisition (M&A) activity in the property/casualty and reinsurance industries continued to grow at a steady pace in the first half of 2014.

This is based on new A.M. Best research, which found that 35 P/C and reinsurance deals were announced globally during the first six months of 2014. The available disclosed amount for all deals was approximately $5.6 billion, compared to slightly half of about $10 billion announced for all of 2013.

Similarly to previous years, much of the M&A activity in the property & casualty industry during the first half of 2014 was driven by consolidation or companies attempting to enter emerging markets such as Asia and Latin America.

Although not included in A.M. Best’s six-month 2014 deal count, one example of this trend was Ace's July 4th announcement that it will be acquiring the commercial business of Itaú Seguros in Brazil, for nearly $700 million, to become the largest commercial insurer in Brazil. 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 total premiums to ACE compared with about 8 percent of total premium in 2013 - making ACE one of the major players in the region.

On the sell side, increased competition, low interest rates and lower insurance rates have prompted many companies to downsize through the divestiture of underperforming or non-core business lines. A.M. Best notes that some insurers now understand that organic growth remains challenging at this stage of the cycle, making acquisitions an attractive alternative to growing the business internally.

M&A, property, casualty, A.M. Best, emerging markets, Asia, Latin America

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