M&A indicative for the life business in 2017

On the life insurance sector, a flurry of mergers & acquisitions has defined 2017, according to executives interviewed by Intelligent Insurer for our year-end questionnaire.

“In the life segment, we would refer to three M&A operations: the acquisition of Delta Lloyd by NN Group, the envisaged acquisition of Generali by Intesa SanPaolo, and the merger between Standard Life and Aberdeen,” said Benjamin Serra, vice president and senior credit officer at Moody’s.

The Delta Lloyd acquisition, which was agreed in December 2016 but concluded in 2017, reveals the significant challenges that some insurers face in a low interest rate environment, Serra noted. Delta Lloyd’s solvency ratio was weakened by low interest rates and decided it would be best to tie itself to a stronger insurer, he added.

Dutch NN Group offered €2.5 billion to take over its competitor Delta Lloyd.

The planned acquisition of Generali by Intesa SanPaolo, which did not happen in the end, shows that banks are increasingly willing to diversify in insurance and also reveals the blurring frontiers, not only between banks and insurers but also asset managers, Serra said.

In January, Italian bank Intesa San Paolo had confirmed that it was considering the acquisition of Assicurazioni Generali.

As a result, Generali in February acquired 510 million of ordinary shares of Italian bank Intesa Sanpaolo, equal to 3.04 percent of its overall share capital, to block a potential takeover move. A plan that worked for Generali.

The merger between Standard Life and Aberdeen illustrates, what insurance companies are doing to adapt to the low interest rate environment and the increasing competition with other savings providers, Serra explained. Insurers increasingly diversify in asset management, and in an extreme version, Standard Life has turned into an asset manager.
Standard Life and Aberdeen agreed in March on an £11 billion all-share merger which will see Aberdeen shareholders own 33.3 percent and Standard Life shareholders own 66.7 percent of the combined business.

This is just a snapshot of what executives told us in our Christmas questionnaire. For the full comments from all 16 executives that took part in our survey, please click  here.