A.M. Best Briefing: Global Reinsurance M&A – A Strategy or Ultimatum?

OLDWICK, N.J.--()--A.M. Best has released a briefing exploring the recent wave of merger and acquisition (M&A) activity in the global reinsurance industry and how it reflects reinsurance companies’ desire for scale to maintain relevance amid challenging market conditions.

The Best’s Briefing, titled, “Global Reinsurers: M&A – A Strategy or Ultimatum?” states that A.M. Best expects M&A activity to continue in 2015 as competition intensifies and returns continue to decline. Stock price-action for the top U.S.-traded reinsurers delivered less than exciting returns in 2014, up 6.5%, with a few companies seeing their stock price decline for the year versus the market total return of 11.4%. With current market conditions of double-digit price declines, increasing commissions and lower premiums, as well as the increased competition, the need for M&A is becoming clearer.

As cedents increasingly seek companies that have a wide product offering and a strong market presence, A.M. Best believes reinsurers that are able to move in and out of various business classes and geographies as market conditions dictate will have a first-mover advantage for possible suitable alternatives that will allow for the development of more efficient, focused and diversified companies. Therefore, A.M. Best anticipates those companies will likely see the majority of the deals in the market. With each deal, the reach for relevance becomes even more competitive.

A.M. Best also notes that size alone is not a substitute for an organization’s overall discipline, conscientious and proactive risk management, underwriting, and focus on emerging risks that could impact the company’s financial strength. Underwriting discipline and anticipation of possible market risks allow companies to remain prosperous and possibly ahead of market conditions.

To access the full, complimentary copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=233846.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contacts

A.M. Best Company
Mariza Costa
Senior Financial Analyst
(908) 439-2200, ext. 5308
mariza.costa@ambest.com
or
Greg Reisner
Managing Senior Financial Analyst
(908) 439-2200, ext. 5224
greg.reisner@ambest.com
or
Robert DeRose
Vice President
(908) 439-2200, ext. 5453
robert.derose@ambest.com
or
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
christopher.sharkey@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

Contacts

A.M. Best Company
Mariza Costa
Senior Financial Analyst
(908) 439-2200, ext. 5308
mariza.costa@ambest.com
or
Greg Reisner
Managing Senior Financial Analyst
(908) 439-2200, ext. 5224
greg.reisner@ambest.com
or
Robert DeRose
Vice President
(908) 439-2200, ext. 5453
robert.derose@ambest.com
or
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
christopher.sharkey@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com