OLDWICK, N.J.--(BUSINESS WIRE)--In this third of five “First Monday” episodes, A.M. Best Senior Financial Analyst Salman Siddiqui discusses how the Middle East is ripe for mergers and acquisitions (M&A) as insurers look to broaden their profiles and maintain market positions. Click on http://www.ambest.com/v.asp?v=fmmiddleeast815 to view the video program.
The remaining “First Monday’ episodes will focus on how insurers have increased their overall risks and reduced their liquidity in investments and how fluctuating oil prices are hampering Nigeria’s insurance market. “First Monday” is A.M. Best’s monthly program featuring commentary by the company's leading analysts.
Medium size players in the Middle East are trying to maintain their market positions and smaller ones are struggling with profitability due to high expenses. Recently, Middle Eastern insurers have strengthened their profiles through acquisitions and by increasing their participation in selective companies.
“The two key drivers of M&A activities are fragmentation of the market and regulation in the region,” said Siddiqui. “Markets across the Middle East are heavily fragmented with a large number of players competing for a small amount of premiums. The top five companies almost always dominate the market, while the smaller player struggle to build their top line and achieve economies of scale. The solution for fragmentation and regulation is for the smaller companies to combine and build a larger company, which would enhance these smaller companies’ business profiles and allow them to achieve top line cost efficiencies.”
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