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Financial institutions M&A: Sector trends - July 2017
Insight
Prof. Dr. Roger Kiem

Financial institutions M&A: Insurance

Favourable environment for insurance M&A including ongoing consolidation in the life insurance sector

Current market

  • Upward

We are seeing

  • Strategic M&A deals
  • Significant consolidation as soft market and higher capital requirements are driving potential for consolidation in general/ reinsurance sectors
  • Intra-group reorganisations

Key drivers

  • Appetite to replicate UK back- book consolidation around Europe
  • Asset availability as EU banks offload non-core assets
  • Market participants searching for growth outside primary markets
  • Financial sponsor interest in insurance assets
  • Heightened US/China inbound interest in insurance assets
  • Global Systemically Important Insurers reducing Solvency II/ regulatory capital requirements by shedding capital-intensive business lines

Trends to watch

  • Solvency II and Senior Insurance Managers Regime require a full list of those in key functions to be set out in a governance map showing clear lines of reporting and organisational responsibility. This is driving intra-group reogranisations aimed at optimising regulatory capital efficiencies, in lieu of the new risk-based Solvency II requirements, and improving corporate governance structures
  • Searching for growth and higher profit margins outside primary markets
  • Ongoing consolidation in the life sector
  • Investment in fintech

Our M&A forecast

Sustained levels of M&A across Europe driven by continued pressure on the Global Systemically Important Insurers to exit legacy and non-core portfolios and focus on capital redeployment to escape additional operational and regulatory burden of the 'SIFI' designation.

 

Publicly reported examples

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Financial institutions M&A: Sector trends

 

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