Global Merger Trends Strong

A majority of insurance executives expect that merger activity will move ahead faster for international markets than in the United States, according to a consulting firm survey.

The poll by KPMG in New York found that more than 60 percent of the 65 North American insurance executives surveyed expect consolidation activity to accelerate within their national markets and internationally over the next three years.

Those polled saw nondomestic markets as being more active on the consolidation front, with 17 percent expecting consolidation to accelerate “substantially” in international markets, compared with only 9 percent who said consolidation would accelerate “substantially” in North America.

And while a majority of respondents said they expected organic growth to be more important to their organizations over the next three years, nearly 59 percent said they would consider an acquisition if the right opportunity came along.

Michael Ryan, a partner in KPMG's Transaction Services practice, said, “Corporate executives are telling us that there is tremendous opportunity with additional acceleration expected in the short term as companies focus on global strategies to increase market share and profitability.”

Since the North American market remains fragmented, significant opportunity exists for consolidation. “But the greatest opportunities exist in tapping into less mature markets, such as China, India and South America,” Mr. Ryan said.

Moreover, while strategic growth will occur as Western companies consolidate in order to grow, insurance companies in Asia-Pacific and other parts of the world are focused on organic growth by attracting new customers, Mr. Ryan asserted.

In the KPMG survey, executives said their companies' main objectives for acquisitions were to increase market share, increase financial strength, and to diversify products and services.

In terms of the most important strategies for delivering growth over the next three years, 31 percent of insurance executives cited organic growth, 28 percent said joint ventures, 25 percent said mergers and acquisitions, and 23 percent said alliances and partnerships.