Emerging risks | Growth Opportunities | APAC Insurance
Emerging risks | Growth opportunities | APAC insurance
The shape of things to come
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Despite softer market conditions and a more benign reinsurance environment, insurer analysts expect cost pressures to continue to bring fresh opportunities to the market. This will be particularly relevant for smaller players, as they are tested by new RBC rules and volatile reinsurance premiums, especially for nat cat.
“I would expect to see a lot more insurance M&A activity over the next three to five years as smaller insurers adjust to new capital frameworks,” predicts Hodgkinson.
This creates an exciting opportunity for insurers that want to grow in the region. However, after years of inflated valuations before the Covid-19 pandemic, insurance M&A has entered a more disciplined phase.
Within this more mature environment, future opportunities will favour specialist players that have the expertise, resources and technology to unlock operational efficiencies or distribution synergies.
“When pursuing an M&A growth strategy, insurers need to make sure it is consistent with their core strategic objectives – scale, geographic/product diversification, distribution expansion – and be clear on what is driving underlying growth in the target insurer,” says Ward. “Is it distribution? Does it relate to underwriting and claim capabilities? Is it the shareholding structure? Answering these questions will ensure that the target meets inorganic growth requirements.”
Ultimately greater consolidation will be good for both the resilience of the industry and consumer choice.
“Insurance M&A will continue to play a pivotal role in how the APAC insurance markets develop, especially in Southeast Asia, India and China,” says Generali’s Dhareshwar. “This provides the chance for companies to exit businesses that are not a good strategic fit, while those that are more strategically aligned can bring in fresh capital, technical expertise and better risk management practices. This will improve the professionalism of the industry.”
