A financial analyst said Munich Re's deal to acquire Midland Company could spark renewed interest in acquisition of other U.S. insurers, with an advantage to foreign acquirers seeking to take advantage of the weak dollar.
Last week, Germany-based reinsurance company Munich Re announced a $1.3 billion deal to purchase Cincinnati-based specialty insurer Midland Company.
Munich Re said the deal would open doors to distribution channels in the United States that the company does not enjoy today. The company added that the purchase of Midland is part of its overall strategy to grow business in the United States.
In an analyst's note, David Lewis with Raymond James & Associates Inc. said the deal is fairly priced and no competing bids are expected.
He said the deal could "stir up additional [merger and acquisition] activity within the U.S. property-casualty market over the next 18 months."
He said the weak U.S. dollar will give foreign buyers of insurance carriers an advantage in making deals over this period. Mr. Lewis noted that specialty insurers with "expertise in marketing and underwriting more difficult risks will gain the most attention."
The analyst listed seven companies that, he said, are attractive targets:
o Argo Group
o American Safety Insurance Holdings
o Hallmark Financial Services
o HCC Insurance Holdings
o ProCentury Corporation
o Selective Insurance Group
o American Physicians Service Group, a medical malpractice insurer
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