Executing and implementing mergers and acquisitions is the top thing on reinsurance executives' minds, according to a survey from Xuber, an insurance software provider firm.
The survey found that the major challenge reinsurers face as a result of M&A is the cultural integration, with 95% of respondents placing it among their top five concerns, and one such respondent remarks that, “The biggest cause of failure in M&A is lack of leadership and cultural fit.”
Factors driving M&A activity include the ongoing soft market, low interest rates and increasing amounts of third-party capital, which drives down prices and erodes terms and conditions. As a result of increasing M&A, fewer reinsurers will exist, but 80% of those surveyed did not believe that this would lead to less competition.
Respondents offer split views on regulation: Two out of every five (41%) reinsurer executives say that the industry is over-regulated, but 39% say it isn't.
Respondents also offered mxied responses regarding doing business in London: 45% of respondents said the regulatory environment puts off insurers from opening in London, while 31% disagree and 24% are unsure. However, while the respondents agree that doing business in London is expensive, it appears to be a price worth paying.
“While the compliance costs are very irritating, the lines of business, quality of underwriting and fit-for-purpose products are why people will continue to use London,” one executive says.
Other highlights of the survey are included in the inforgraphic below, provided by Xuber. Click image to enlarge
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