20 September, 2011 


Number of deals in first half of 2011 exceeds total for 2010; trend set to continue.



Mergers and acquisitions activity in the insurance industry in Asia Pacific has risen sharply since the beginning of the year, according to a new report released today by the Corporate Insurance practice at Clyde & Co.


Corporate Insurance M&A – A global overview 2009-2011 reveals that, while transaction activity worldwide declined steadily in the aftermath of the economic crisis, in the six months to June this trend has been reversed. In Asia Pacific,  the number of deals in the first half of the year exceeded the total for 2010.


The largest increase was in China – the number of deals so far in 2011 was double that of the previous full year, accounting for 15% (up from 6%) of M&A activity in the region.  Other countries seeing more modest activity include Australia, Japan, India, South Korea, Indonesia and Malaysia.


Michael Cripps, Head of Clyde’s Corporate Insurance group in Asia  said: “It is evident that mergers and acquisitions are firmly on the agenda of underwriting businesses. Across the region there are two distinct themes driving corporate transactions: the consolidation of local markets to create businesses with more robust balance sheets, and the desire of international insurers to offset stalling growth in more mature home markets by expanding into these growth sectors.”


China remains a top priority for insurers both in and outside the region. While activity since 2007 has been at historically very low levels, the appetite from foreign investors remains strong – but barriers to entry are not insubstantial and the market is still dominated by domestic players. Most significantly, the maximum level of foreign participation in Chinese domestic insurers remains unchanged at 20%.


At the other end of the scale, the Malaysian government has encouraged international involvement – recently raising the ceiling for foreign investment to 70%. This, combined with strong prudential and regulatory frameworks, is making Malaysia a key territory for international insurers.


Michael Cripps continued: “Across APAC our clients are telling us the same thing; regulators and customers are looking for strength and stability in the risk transfer business. This means that we expect to see continued activity across all types of transactions – whether that is fully-fledged mergers and acquisitions, or more tactically driven deals to sell off portfolios or renewal rights.”


Download full report here.




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