2015 article, we reported that global M&A in the insurance
sector was on the rise again after a number of quiet years in the
aftermath of the financial crisis. Deal activity in the European
market was hit particularly hard by the financial crisis, but a
steady stream of transactions in the United States helped the
Americas' deal activity remain stable and eventually showed
signs of recovery in 2013.
Earlier this year, we followed up to discuss a report which
stated that 2015 had been a record year for North American
insurance agency M&A. The question we are asking now is whether
we can expect the good news – or, perhaps more specifically,
growth – to continue?
Weak profitability tied with low investment yields: Which may
encourage insurers in mature markets to plan international
expansions and domestic deals.
The power of technology: Acquiring or developing technological
expertise will become an increasingly important goal for insurance
Demographic effects: Aging populations are straining markets
and social security programs. This may accelerate the demand for
insurance in different market levels.
Changing hurdle rates: Transactions will be assessed against
changing expectations for rates of return which will result in
possible regional shifts in bidding power.
This growth-oriented prediction is echoed by others, such as
Towers Watson and Willis whose latest report found that there was little data
to suggest that the recent strength in insurance M&A activity
would not continue into the future. 82% of companies surveyed plan
to acquire in the next three years and over 90% in emerging
markets, while only a third of all companies had plans to divest.
Also, more than 40% of those who have completed three or more deals
over the past two years stated that they had plans for at least
three deals in the next three years.
North America has recently been a key driver of global M&A
activity, particularly in the insurance industry and Canadian
insurance providers have been involved in a number of these
transactions. Looking forward, Ernst & Young sees
further scope for Canadian insurance M&A activity, identifying
the property & casualty insurance sector as a potential space
for further consolidation its 2016 EY Canadian property and
casualty insurance outlook.
While only time will tell for sure how the predictions for
continued strength in insurance M&A activity will bear out,
both in Canada and more broadly, it will be interesting to watch in
the coming months to see how the fluctuating Canadian dollar, the
call of international markets, foreign players and the changing
competitive landscape combine to affect M&A activity this
The author would like to thank summer student Justine Smith
for her assistance in preparing this article.
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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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