Asia Pacific Overview - Mergers And Acquisitions 2009-2012

Mr Andrew Holderness of Clyde & Co says that mergers and acquisitions activity has been trending down over the last three years, adding that Asia Pacific has also seen its share of global M&A activity drop from a high of 24% in the first half of 2011 to 8% in the first six months of 2012. He shares details from a report released recently by the Corporate Insurance Group at Clyde & Co.

Asia Pacific Overview –

Mergers and Acquisitions 2009-2012

Australia

The Australian market has seen a strong mix of both inbound and outbound activity. While Australia is very much on the radar of Asian companies with international ambitions, the market remains highly concentrated, dominated by the two biggest players: Insurance Australia Group (IAG) with around 40% of the market, and Suncorp with 34%.

The only international insurer involved in inbound M&A activity in Australia over the last 12 months was Beazley Group, which expanded its presence in the group disability market through the purchase of two managing general agencies, Australian Income Protection and Blue-GUM Special Risks, both based in Sydney. These acquisitions demonstrate the desire of international insurers to access established books of business as a way of growing their presence in the Australian market.

China

The highest-profile inbound deal over the period July 2011 to June 2012 was IAG's acquisition of a 20% stake in China's Bohai Property Insurance Ltd, completed in April. Bohai is focused primarily on motor insurance, a product line in which IAG traditionally has had competitive strength. It is likely that there will be more transaction activity in this sector as the regulator has opened up the motor insurance market to foreign companies, removing minimum premiums in order to increase competition.

Also in April, German insurance group ERGO, a subsidiary of global reinsurance giant Munich Re, announced that it had received the necessary start-up permissions from local regulators to launch a joint venture operation with Shandong's state-owned Assets Investment Holding Company (SSAIH).

In terms of outbound activity the only transaction of note was the announcement in November 2011 of state-owned reinsurance giant China Re's partnership with the UK's Catlin, marking the first time a Chinese company has made a direct investment in the Lloyd's market.

Hong Kong

Hong Kong remains a key insurance hub in the region, although the relatively low number of targets will always limit transaction...