S&P: Reinsurance M&A Will Be Driven by Berkshire Hathaway Model
Monday, 08 31 2015, Category: Insurance and Reinsurance, Country: World
Reinsurance M&A activity should continue well into 2016 as competitive pressures continue unabated, Standard & Poor’s said in a new report.
The ratings firm said that the Berkshire Hathaways of the world – investment holding companies seeking to enter the insurance space – will likely drive many of the future deals.
“Globally reinsurers have seen the future, and it requires greater scale and diversification for them to remain relevant,” S&P said, noting that the trend will continue “as the remaining small and midsize reinsurers race to find consolidation partners.”
But who will be the buyers? S&P said that investment holding companies seeking to tap into reinsurer revenue potential are driving this. The acquirers, S&P said, are not unlike the Berkshire Hathaway business model, where an investment holding company has snatched up firms both in and outside the insurance industry.
Source: Insurance Journal