A new study by Swiss Re Sigma entitled M&A in insurance: start of a new wave? (the
Study) notes that M&A activity in the
insurance sector is finally beginning to rise after a sharp decline
in 2008 and 2009 resulting from the financial crisis. The Study is
careful to note, however, that despite the recent spike, M&A
insurance activity is still well below reported pre-crisis levels,
with only 489 completed deals globally in 2014 as compared to 646
deals in 2007.
The role of structural and cyclical factors in
According to the Study, M&A activity in insurance is
influenced by how firms and management respond to both structural
shifts in the industry and cyclical economic factors. Structural
shifts include regulatory, technological and distribution changes
and cyclical factors include developments in business cycle, moves
in financial markets and underwriting market conditions. The Study
found that structural factors or cyclical factors alone only have
gradual impacts on variations in M&A activity.
Recent surge in M&A activity: areas and
The Study hypothesizes that the overall increase in M&A
insurance transactions actually stems from increases in 3 main
areas: industry themes, specific geographical areas, and
In terms of industry themes, there have been upsurges in several
key M&A themes recently, including divestment investments and
strategic sales of closed blocks and run-off operations,
transactions involving alternative investors, and strategic deals
focused on expanding expertise, distribution capabilities and
geographical reach. Geographically, there has been an increase in
M&A insurance activity in Asia Pacific and in Latin America as
well as in specific sectors such as Property & Causality
reinsurance. And from a sector perspective, there has been a noted
increase in consolidation among intermediaries as a result of
structural shifts in insurance distribution.
The Study attributes the above increases in M&A activity to
the introduction of new regulations that encourage insurers to
restructure in pursuit of capital efficiencies and/or economies of
scale or scope. The Study also speculates that the recent surge in
M&A activity may be fueled by access to digital distribution
M&A in insurance: predicting the
While it is unlikely that we will see an industry-wide surge in
M&A within the insurance sector, the Study predicts that
M&A activity will continue to rise and build in the specific
pockets of areas and sectors described above. It is also likely
that globalization will result in continued increases in M&A
activity among foreign insurers from both advanced and developing
companies as a means of expanding into high growth markets,
deploying capital and diversifying globally.
The author would like to thank Julia Bassett, articling
student, for her assistance in preparing this legal
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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