Best’s News & Research Service - August 04, 2014 11:02 AM (EDT)
A.M. Best Special Report: Life/Health M&A Activity Driven by New Markets and Consolidation
Oldwick //BestWire// - Global merger and acquisition (M&A) activity in the life/ health (L/H) industry during the first six months of 2014 is on track, in terms of total dollar value, to be consistent with full-year 2013 reported activity. According to A.M. Best research, 14 L/H deals were announced globally in the first half of 2014, with a total disclosed value of approximately USD 10.6 billion, a little more than half of the approximately USD 18 billion in activity for all of 2013.
Much of the recent activity in the L/H segment continues to reflect: industry consolidation, some of which is larger players looking to gain additional scale, as was the case of Dai-ichi of Japan's acquisition of Protective Life; veteran acquirers entering into new markets as a means to diversify globally; and the influx of new participants into existing markets primarily backed by private-equity organizations.
Factors driving the consolidation of the industry include:
- The impact of the sustained period of low interest rates;
- Regulatory challenges causing insurers to focus on less capital-intensive and market sensitive products; and
- Lower expected margins in certain lines of business.
From the sell side, much of the M&A activity has been driven by the desire to "de-risk" balance sheets and focus on core competencies. Product mix has gradually shifted toward offerings that are less capital intensive and have less generous benefits.
To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=227389&AltSrc=26 .
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