Mergers and acquisitions (M&As) in the insurance and reinsurance sector are predicted to continue into 2016.
Experts linked the scenario to lack of organic growth and market conditions which has put the risk transfer industry under increasing pressure.
Mergers and Acquisitions were the hot topic at the Monte Carlo Rendezvous following the recently announced £3.5bn acquisition of Amlin by Mitsui Sumitomo, the latest in a string of deals.
In Nigeria AXA has made a significant inroad into the insurance market.
AXA in July 2015 reincorporated Mansard Insurance Plc as AXA Mansard Insurance, to complete the acquisition and brand essence change that started late last year.
The company also bought 77 per cent majority equity stake in Mansard Insurance Plc, in a major market-entry push that promises to profoundly impact the Nigerian insurance industry and already has a substantial presence in Africa including Cameroon, Gabon, Ivory Coast, Morocco, Senegal and Algeria.
AXA took over the 77 per cent equity stake held by Assur Africa Holding Limited (AAH), the core investor that had purchased the former Guaranty Trust Bank insurance subsidiary.
GTBank sold its insurance subsidiary, Guaranty Trust Assurance Plc, in compliance with regulatory framework of the Central Bank of Nigeria (CBN).
AXA entered into an agreement to acquire 100 per cent of Assur Africa Holdings, which then held the 77 per cent equity stake in Mansard.
“Mergers and acquisitions are on everybody’s lips at Monte Carlo, revealing the harshness of market conditions,” said Martyn Street, Analyst and Senior Director at Fitch Ratings.
He expects further consolidation in the sector, but believes that deals will not lead to a contraction of capital in the market and therefore won’t affect soft market conditions.
According to Mike McGavick, CEO of XL Catlin: “We are nowhere near the end when it comes to mergers and acquisitions. It is telling that you now see larger firms like ACE and Chubb jump into the process. This sort of consolidation frenzy happens very rarely.”