Insurance – Reinsurance: mergers and acquisitions transactions 2014-2018
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- competition among reinsurers,
- excess capital available,
- a record 2017 year in terms of claims due to natural events,
- fallout of tax reform in the United States,
- risk taking of certain reinsurers who, because of reduced margins and profits, are willing to pay an additional premium in order to acquire a competitor.
Insurance – Reinsurance: major merger-acquisition transactions (2014-2018)
In billions USD
| Transaction announced | Transaction finalised | Purchaser | Country | Target company | Country | Transaction amount |
|---|---|---|---|---|---|---|
| October 2018 | - | RenaissanceRe | Bermuda | Tokio Millennium Re (TMR) | Japan | 1.5 |
| March 2018 | September 2018 | AXA | France | XL Group | Ireland | 15.3 |
| January 2018 | July 2018 | AIG | United States | Validus | Bermuda | 5.65 |
| July 2017 | November 2017 | Markel Corporation | United States | State National | United States | 0.92 |
| July 2017 | October 2017 | Axis Capital Hdg | Bermuda | Novae Group | United Kingdom | 0.6 |
| December 2016 | July 2017 | Fairfax Financial | Canada | Allied World Assurance | Switzerland | 4.9 |
| December 2016 | May 2017 | Liberty Mutaul Group | United States | Ironshore | United States | 2.94 |
| November 2016 | April 2017 | Axis Capital | Bermuda | Aviabel Cie. Belge | Belgium | NA |
| November 2016 | February 2017 | Argo Group US | Bermuda | Arial Re | Bermuda | 0.24 |
| October 2016 | April 2017 | Partner Re | Bermuda | Aurigen Capital | Bermuda | 0.29 |
| October 2016 | March 2017 | Sompo Holdings | Japan | Endurance Specialty | Bermuda | 6.3 |
| September 2016 | December 2016 | Canada Pension Plan | Canada | Ascot Underwriting | United Kingdom | 1.1 |
| August 2016 | January 2017 | Arch Capital Group | Bermuda | United Guaranty | United States | 3.4 |
| September 2015 | February 2016 | Mitsui Sumitomo | Japan | Amlin | United Kingdom | 5.3 |
| August 2015 | March 2016 | Exor | Italy | Partner Re | Bermuda | 6.9 |
| July 2015 | April 2016 | China Minsheng Banking | China | Sirius International | United Kingdom | 2.6 |
| July 2015 | January 2016 | ACE | Switzerland | Chubb | Switzerland | 28.3 |
| May 2015 | November 2015 | Fosun International | China | Ironshore | United States | 2.3 |
| March 2015 | July 2015 | Endurance Specialty | Bermuda | Montpelier Re | Bermuda | 1.83 |
| January 2015 | May 2015 | XL Group | Ireland | Catlin Group | Bermuda | 4.1 |
| November 2014 | March 2015 | Renaissance Re | Bermuda | Platinum Underwriters | Bermuda | 1.9 |
NA : Not available
Covéa has recently attempted to take control of Scor but the takeover proposal was rejected by the French reinsurer who wished to maintain its independence. This attempt proves that many insurers are trying to merge with major reinsurance groups. This is the case of Axa group with XL in 2018 and AIG with Validus. It is therefore very possible, even likely, that Covéa will try again in 2019 with a new proposal.
Reinsurers provide insurers with almost 350 billion USD of capital. It is interesting to note that the level of capital is growing year after year while mergers and acquisitions do not show any sign of slowing down. The number of reinsurers in operation today is much lower than it was two or three decades ago. The reduction in the number of players therefore does not imply by any means a reduction in the capital available for reinsurance. Market consolidation follows a more general trend not only in reinsurance demand but also in the way it is offered.
The reduction in the number of reinsurers will not result in a reduction in the capital offered nor will it cause the disappearance of existing excess capital. In the short term, more diverse players will appear on the scene. They will stand out from traditional reinsurance, providing a wide range of products, thus facilitating the transfer of risk in reinsurance.
Main benefits of a merger-acquisition
- Rapid increase in market share,
- Economy of scale with reinsurers being cost sensitive,
- Acquisition of new teams and new talents.
