In mid-June Allied World Assurance Co. Holdings AG and Transatlantic Holdings Inc. announced a $3.2 billion merger deal, creating a global specialty insurer and reinsurer operating in 18 countries and on six continents.
In a report from Keefe, Bruyette & Woods, the consulting firm says that the merger does not appear to be a signal of increased activity in the merger and acquisition arena—but the deal in itself is considered a potent combination.
Other industry players weighed in as well on the merger's impact.
John Daum, executive director for Lockton Re, says that in his view the transaction would have a minor effect on capacity. But he views the overall deal as a good one for both parties, taking as it does the mature book of business of Transatlantic and melding it with Allied.
Adds Lara Mowery, head of global property specialty for Guy Carpenter: “In terms of pricing or available capacity for property business, we do not anticipate a material impact specifically from this scenario.”
But others believe that the pressure for some insurers to pursue an M&A strategy will continue.
“We expect the trend to continue and to see more mergers over the next 12 to 24 months”—and that could contribute to rate increases as capacity diminishes, says Jim Bradshaw, CEO for Willis Re Inc.
“We expect mergers and acquisitions to continue based on the challenge for insurers to grow organically, particularly in the regional market sector,” adds James Kent, president of Willis Re Inc.
Overall, when it comes to additional capacity, Bradshaw believes new capacity will not come in the form of the creation of new companies, but the utilization of side cars, or capital raised for a specific risk, and increased M&A activity.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
