It is estimated that insurers could finalize estimates for Sandy-related payouts by late first quarter/early second quarter 2013. This may spur M&A activity as some P&C companies look to diversify into other types of insurance and those organizations whose capital strength allowed them to absorb Sandy-related losses seek to acquire assets from competitors who did not fare as well.
7. Emerging Markets
As an alternative to investing in organic growth or domestic businesses, some large insurers are making focused M&A investments in Latin America, Asia and other re-emerging markets. When considering investments in such markets, however, companies should first assess whether growth prospects there hold long-term promise, especially when weighed against potential regulatory and operational challenges.
6. Alternative Use of Capital
Due to the ongoing discount-to-book issue, many insurers with excess capital have been buying back stock rather than transacting M&A deals. Some have been exiting certain lines of business or markets and using that capital to shore up remaining operations and older acquisitions, comply with capital adequacy requirements, or pay back shareholders. There has also been more interest in putting capital back into the business to drive organic growth by upgrading core infrastructure, IT platforms and other back-office systems.