• Industry: Financial Services, Insurance
  • Type: Business and industry issue, Regulatory update
  • Date: 4/4/2014

Trends shaping the future insurance M&A landscape 

As insurers seek to secure profitable growth, enter new markets and rationalize non-core operations, mergers and acquisitions (M&A) are an increasingly important element of the overall strategy.

Looking at 2014 and beyond, we expect to see a dynamic deal environment with continuing appetite for expansion into core markets with the following trends shaping the future M&A landscape. Contact us to learn more about these trends and KPMG's global insurance M&A platform.

KPMG’s 10 predictions for M&A activity for insurers

  • 1 One Opportunities created through dramatic shifts in technology use Close Open
    Step change in the use of technology is coming. High growth markets, without constraints of legacy products and infrastructure, could lead the charge, particularly by leveraging mobile technology and expanding upon the success of telematics in motor to property. Investment opportunities will be created through partnerships, joint ventures and acquisition of innovators by traditional players.
  • 2 Two Increasing activity and competition from private equity and non corporate acquirers Close Open
    Current market incumbents can expect increasing competition from private equity, funds, and in some instances pension funds, buyers in both mature and high growth markets, building on the momentum of recent deals.
  • 3 Three Asia remains a competitive, heavily penetrated market but opportunities remain Close Open
    More selective activity is expected, as organizations assess which markets are core for their business and what is the best entry model and partner to capitalize on the primary opportunity. Underlying fundamentals will continue to attract interest in China, India and Indonesia, particularly as the developing regulatory environment opens up the market.
  • 4 Four Continued activity expected in Latin America Close Open
    We anticipate increasing transaction activity in Latin America as insurers look to secure position in these rapidly growing markets.
  • 5 Five Where next? Markets in Africa, Turkey, the Middle East attract attention Close Open
    We expect to see a new horizon of high growth markets with countries in Africa and the Middle East attracting significant interest, prompting a rapid increase in M&A and distribution related transactions. We also foresee the continued evolution of alternative business models like micro insurance.
  • 6 Six Regulatory change continues to act as a deal catalyst Close Open
    As in recent years, the continuing implementation of risk based capital and consumer protection initiatives will serve as a catalyst for change, creating investment opportunities. Specific initiatives like the Asset Quality Review for the banking sector will result in a more rigorous assessment of whether insurance businesses are considered core or could be sold.
  • 7 Seven Rising inbound M&A interest into mature markets Close Open
    In a reversal of recent deal flow, we expect more inbound investment to mature markets. For example, as Chinese and other investors look to capitalize on opportunities created by current economic conditions.
  • 8 Eight Traditional insurers exit legacy segments/sell non-core books to focus on growth and capital redeployment Close Open
    We forecast a greater focus on the management of in-force business, leading to improved internal performance but also sales to specialist carriers that can leverage technology and scale benefits. Although the challenges are significant, opportunity exists to create a pan-European platform to consolidate legacy and closed book portfolios.
  • 9 Nine Opportunities to create core infrastructure in high growth markets Close Open
    Many high growth markets lack the core infrastructure to support ongoing sectoral development, including central clearing houses and data availability and integrity. The development of this infrastructure will create investment opportunities.
  • 10 Ten Access to data changes results in new partnerships and business models Close Open
    Another step change for the industry occurs as partnerships are established to capitalize on data driven business models (eg. Google, Amazon, Apple, retailers) resulting in a fundamental change in the way insurance is bought and sold. Traditional incumbents must react.

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