Mergers and Acquisitions Trends in the Global Property and Casualty Insurance Industry
The study analyses merger and acquisition transactions in the global property and casualty insurance industry. The general state of the industry along with factors affecting merger transactions has been described in the study. The study covers five regions—North America, Europe, Asia-Pacific, Latin America and the Caribbean, Africa, and the Middle East. Further, drivers and restraints affecting mergers in each region have been brought out in the study. The analysis also highlights buyer profile, seller profile, target profile, time period, and deal rationale by region. Deal parameters include percentage sought, valuations, transaction range, revenue range of buyers and targets across the globe.
Mergers and acquisitions (M&A) in the property and casualty (P&C) insurance industry define and shape the future structure of the industry. Merger activity drives revenue growth and industry consolidation and is affected by a variety of factors, including:
Profitability trends—Improved underwriting performance by P&C companies in 2013;
Valuation trends—Narrowing the valuation gap;
Market cycle—Hard market cycle;
Reserves and capital adequacy—Increased reserves recorded in 2013 compared to the previous year; and
Regulatory and governance issues—Restructuring of business units by several companies for regulatory compliance.
M&A activity in the P&C insurance industry is declining in deal volume but witnessing an increase in average deal value in 2013. Improved performance in the industry, renewed investor confidence, improved reserves, and the beginning of the hard market cycle (increase in premiums) complemented by a year (2013) with fewer catastrophic losses than the previous years have improved the prospects of merger activity in this space globally. P&C companies are focusing on greater capital efficiency and cash flow generation by seeking mergers in developing countries with low penetration but high growth potential to strengthen their distribution network.
North America continues to be the hub of merger activity in 2013, with a large proportion of domestic mergers and few outbound transactions in Latin America, the Caribbean, and Europe. European P&C companies, on the other hand, are actively restructuring their business units across the globe and have been active in many outbound transactions, especially in the Middle East region. While Africa and the Middle East have huge growth potential in the P&C space, a lack of transparency is hampering M&A activity. Asia-Pacific, Latin America, and the Caribbean feature domestic merger activity where P&C insurers from developed countries seek to strengthen their distribution network in low-penetration countries within the region.
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