Buying scale and scope: What's driving activity in 2017?
With the underlying factors supporting M&A strong, we anticipate 2017 will see a return to form for insurance transactions.
Low growth encouraging consolidation and diversification
Against a low growth backdrop, achieving scale through acquisition has clear advantages, both in expanding revenues and also offering scope for streamlining costs.
Focus on core activities prompting on-going disposals
The flipside to achieving scale through acquisitions is the disposal of businesses deemed to be non-essential as insurers focus on their core activities and geographies.
Digitisation will spur M&A
Insurers' efforts to remain competitive in a low growth environment are leading to greater investment in digital technology.
Asia leading the way into new markets
In 2016, 60% of the top 20 deals involved an Asian-based acquirer. Although activity looks set to continue, regulatory moves in China may slow M&A in the near term.
Protectionism rising but regulation is driving M&A activity
Tighter rules in some markets are imposing restrictions on off-shore re/insurers. Those looking to start or extend activities may need to restructure operations or establish a presence on the ground.
Run-off moving up the agenda
The run-off market continues to attract significant attention in the Americas and Europe. With plenty of liquidity in the system there is no shortage of buyers in what has become a very competitive market.
Targeting teams predictable but effective
Given that acquiring or merging with another business can be a lengthy, complicated and expensive process, a consistent trend remains the poaching of whole teams underwriting specific books.
Although uncertainty characterised 2016, we believe M&A will continue to appeal to those seeking scale, cost efficiencies, or an exit route.
Growing organically: Where are insurers searching for opportunities?
Against a challenging backdrop, insurance businesses are looking at all options in pursuit of growth.
Regulatory changes driving market interest
In a number of key emerging markets such as India and South Africa recent and upcoming regulatory changes are having a significant impact on insurers' ambitions.
Pursuing the hub model
Singapore has long positioned itself as the Southeast Asia hub. Others following suit include Dubai for the Middle East, Miami for LatAm and the Caribbean and South Africa for the wider continent.
Entering into a joint venture
JVs may be complex to operate, but they remain popular, particularly in India, China and Brazil.
The lure of Lloyd's
Another perennially attractive route to new markets is via Lloyd's. The ability to write business as a Lloyd's syndicate offers immediate access to around 60 countries, with more markets anticipated.
In France, as in other markets, M&A activity has slowed against a backdrop of economic and political uncertainty. At the same time, an increasing number of insurers with the support of some of the big commercial banks are turning to innovation to deliver their longer-term growth ambitions through investment in start-ups. Insurtech is rapidly moving up the agenda and will very quickly shift from becoming a new way of providing insurance to the only way.
Yannis Samothrakis, Paris
From new markets to new products and new models: How are insurers building a resilient global market?
As well as moving into new markets, insurers with growth ambitions are looking at the opportunities to generate new products and services and to trial new processes and business models.
Growth through technology
Technology is rapidly cementing itself as the key to accessing new customers in new markets the Holy Grail for those looking for growth.
Search is on for better people, better data and better insight
Most insurance businesses are still grappling with how best to make the most of the data they hold. Many require considerable investment in talent, systems, analytics and processes to move forward.
Insurtech generating significant interest
As Insurtech generates huge interest among insurers around the world, so insurers are looking to develop process and cost efficiencies.
Micro-insurance still work in progress
Micro-insurance is another product which offers significant growth potential. South Africa, Thailand, China, India and Nigeria are among the markets offering immense growth opportunities.
Takaful has long been touted as a potentially huge growth market. Interesting moves by sizeable players this year may indicate reignited interest in this sector.
Drones and driverless cars
The increasingly widespread use of drones is creating opportunities for insurers while the industry is moving quickly to respond to the arrival of autonomous vehicles.
Parametrics offer potential but more effort needed
Parametric insurance has the potential to transform the way disasters are managed as governments and aid agencies reset expectations about how fast aid can be delivered.
Traditional products in new markets
Traditional products often generate fresh interest in new markets. Health and life insurance is a good example of this trend in 2017.