Atlas Magazine May 2006

The big moves

Provided it is not affected by soaring oil prices, the world economic growth combined with the profits achieved in 2005 is likely to significantly whet the appetite of the biggest insurers and reinsurers.

Following the footsteps of the Bermudans and the American investment funds eager for prays, the world's insurance giants are seized by a compulsive bulimia that nothing seems able to satisfy. For the time being, the key words are: redeployment, cost reduction and takeovers.

A series of merger-acquisition moves are expected, which will trigger a reshape of the market. The potential response of Munich Re to Swiss Re's offensive, stands as the major episode in the struggle for leadership.

On the eastern front, the major operations are aimed at Asia's newly-emerging markets with China and India as prime targets. Asian countries are doubly attractive: a huge premium potential and a privileged destination for cost reduction thanks to outsourcing. Likewise, some eastern European countries are regarded as potential targets.

The 300 billion USD profits that will be harvested by oil-rich Gulf States are quite a temptation. Dubai, Bahrain, Qatar and Saudi Arabia re-emerge as attractive countries. This upturn will only create a new momentum for the business insurance in the region.

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