Slideshow 6 Global Insurance M&A Trends

  • September 23 2013, 12:10pm EDT

In a new report, PwC outlines "a quiet revolution in global insurance M&A." While transaction volumes are not expected to recover along the same lines as it has in the recent past, the following six trends highlight a competitive, less risk averse future for insurance M&A.

1. Increasing inbound M&A in Europe

Insurers from less mature markets may see European acquisitions as a quick way to catch up to the industry in terms of technical capabilities and international clientele. To take advantage of this, European insurers could look at fast-growing markets for mutually beneficial deals.

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2. Greater strategic complexity

Targets will attract bidders with a variety of strategic and financial goals. Therefore, the complicated process of M&A will require increasing customization. This means the success of the deal will at least partially depend on the sellers ability to anticipate and properly react to the specific desires of its bidders.

3. Growing influence of technology

As a result of the growing influence of technology within the industry overall, any technological expertise that can be gained through M&A will be a crucial selling point. Buyers will still need a very discerning eye when seeking a technology-focused M&A strategy, as bringing on talent to fit a specific technology strategy is the best way to ensure satisfaction.

4. Importance of liability transfers

Non-equity M&A deals, including blocks of risk, will persist among insurers, and insurers need to remain open to such alternatives. For non-equity deals, however, legal and regulatory forms become critical.

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5. Need for boldness and creativity

Long-term growth is at a premium, as are opportunities to enter the most attractive insurance markets. Therefore, insurers may need to overcome risk aversions of the past and take a chance through M&A in emerging markets.

6. Persistent political risks

Political risks may increase, especially from perceived or actual protectionism or M&A involving state-controlled insurers, thereby increasing the importance of stakeholder and relationship management with authorities.