A recent report from Bloomberg Intelligence (BI), the research division of Bloomberg, European general insurers’ debt-to-equity ratios indicate that they have the financial capacity to pursue acquisitions in 2025.
These acquisitions are expected to focus on strengthening existing market positions, much like the moves made by Generali and Sampo this year.
This cautious strategy likely reflects the cyclical nature of the insurance industry, with current trends suggesting the cycle is once again shifting downwards.
Kevin Ryan, BI Senior Industry Analyst – Insurance, commented: “Insurers may seek to augment existing market positions in 2025, most likely smaller ones that follow the Generali or Sampo model of adding modest earnings uplift while avoiding the risk involved in larger acquisitions.
“Generali’s €2.3 billion purchase of Liberty Seguros in January cemented the insurer’s positions in Spain and Portugal and also makes it a top ten insurer in Ireland. A related deal in September was Sampo buying all of Topdanmark, having owned 41.1% since 2016. That was unfinished business and key to securing its position as the leading non-life insurer in the Nordic region.”
According to BI, the upward trend in insurance and reinsurance rates that began in 2019 for specialist insurers like Beazley, Hiscox, and Lancashire has persisted. However, signs indicate that price increases are now slowing down in many areas, with some even reversing.
BI suggests that this uncertain outlook and potential profit volatility could drive consolidation within this specialist segment of the insurance market. Since 2020, premium volumes have risen significantly, driven by these rate hikes.
Profits have also grown, as these insurers have managed to avoid major catastrophe losses, even though the past three years have seen the industry face over $100 billion in claims.
Ryan further added: “A paucity of company data makes comparisons challenging, especially as many companies offer multiple business lines, often across national boundaries, with disclosure by business line an increasing rarity. Yet it seems likely that the situation faced by UK auto insurers Admiral and Direct Line is replicated across the industry.
“Admiral, long the UK auto insurance category leader, continues to post strong profit progress despite increased regulation, contrasting with Direct Line which is struggling to rebuild profitability. Direct Line’s woes saw its shares trade as low as 0.86x historic book value, attracting unsolicited bids from Ageas in March and Aviva in November that valued it at 1.4x historic book value. That suggests more may be in the pipeline.”
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