China is seen as the target market for acquisitions this year by 12% of global insurers in a recent KPMG worldwide survey. The Chinese market trails the US which was picked by almost a quarter of insurers polled as their top national destination for acquisitions.
The KPMG report, titled "The New Deal: Driving insurance transformation with strategy-aligned M&A", highlights that 84% of insurers surveyed are planning to make one to three acquisitions in 2017, and 94% are planning at least one divestiture; two-thirds of insurers said they expect to undertake a cross-border acquisition.
On a regional basis, however, 47% of respondents indicated they will focus on Asia Pacific for acquisition opportunities, more than twice the percentage for North America.
Mr Paul Melody, Head of Actuarial Services, Asia Pacific, KPMG China, said: “The emerging markets of Indonesia, India and China remain largely untapped in terms of their premium density — low levels of insurance premium per capita combined with large domestic populations, present significant opportunities for additional scale in the medium to long term. There are significant coverage gaps across the region, making these markets prime targets for insurers looking to diversify and grow.”
In terms of reasons for acquisition, transforming and enhancing their existing business models were identified by 33% of global insurers as key drivers, respectively.
In 4Q2016, KPMG commissioned a survey of 200 global insurance executives to learn about their opinions and plans regarding M&A, corporate strategy, and innovation over the coming 12 months. The survey respondents were divided regionally among firms in Asia-Pacific (33%), Europe, Middle East + Africa (33%), and North America (33%) as well as by the segments Life (25%), Non-Life (25%), Reinsurance (25%), and Other (25%). The segment ‘Other’ encompasses Insurance Brokers and Insurance Services. Companies needed to have a minimum of US$1.5 billion in annual revenue to qualify for participation.