More mergers likely: PWC

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Insurance firms may turn to increased merger and acquisition activity to help deal with regulation and create efficiencies, a PricewaterhouseCooper report says.

Wednesday, September 25th 2013, 12:47PM

Its report on the future of insurance M&A says there is a pick-up in global insurance premiums forecast but insurers were facing a range of obstacles, including regulation, low investment yields and overcapacity in some markets.

Insurers would likely respond with M&A activity, particularly where it enabled them to better capitalise on improvements in technology.

M&A activity has slowed nationwide since 2008 and has generally been less in the growing Asia Pacific region, except in 2011.

New Zealand PWC partner David Lamb said there had been a recent lift in merger activity in this country and he expected that to continue as insurers worked towards greater scale.

“Although many New Zealand insurers expect profitability to remain healthy in the short term, a number of obstacles will continue to challenge profitable growth aspirations. We certainly expect the recent spike in New Zealand insurance M&A activity to continue as international insurers, local insurers and niche players operating in New Zealand look to respond and accelerate their strategic growth objectives.”

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