Recent M&A-related investment from Asia offers yet another twist in the ongoing influx of new capital that has fostered uncertainty among insurers and reinsurers alike. Some insiders view the trend as more positive than troubling, however, though they stress carriers must adapt all the same. [ijtv id=”12814″ width=”340″ float=”right”]
“It makes it more of a global market,” Rod Fox, CEO of the insurance broker TigerRisk Partners, told Carrier Management during the recent 2015 PCI Annual Meeting in Hollywood, Fl. “All of a sudden, you’ve got North American or Lloyd’s or European entities with Asian owners. They’re going to be spending more time thinking about the global marketplace than just their little regional market.”
Fox said the trend will force North American and European companies to “think about what they’re doing in Asia, as the Asians come into other territories.”
Berto Sciolla, Gen Re’s executive vice president, regional manager for North American treaty reinsurance said during the PCI conference that the investors appear to be looking for a Western market foothold but are giving their acquisitions broad autonomy.
“It seems as though some of the foreign investment is not very tactile in terms of management,” Sciolla said. “They’re buying their way into the U.S. market. What we’ve seen so far is that they’ve largely let whoever was operating those companies at the time of purchase largely run those companies.”
Sciolla added that the acquisitions appear to be “more of an investment vehicle than transporting some type of business model into the U.S. market.”
On Nov. 9, China’s Anbang Insurance Group Ltd., agreed to acquire Iowa-based Fidelity & Guarantee & Life, making Anbang one of the largest insurers by market share in fixed indexed annuity products in the U.S.
But the Asia investment trend as been going on for months. In May, for example, China’s Fosun International Ltd. agreed to snatch up the shares it doesn’t already own of Ironshore Inc. for about $1.8 billion. White Mountains Insurance Group agreed in late July to sell Sirius International Insurance Group Ltd. to an arm of Shanghai’s China Minsheng Investment Corp. (CMI) for about $2.2 billion.
As Bloomberg reported at the time of the sale, CMI is among international firms trying to expand in the Bermuda reinsurance market. Fox said that CMA’s acquisition of White Mountains immediately made it a company to watch.
“China Minsheng is an industrial conglomerate with a big insurance arm,” Fox said. “I don’t think they were a household name in North America or Europe before this purchase. “They’re a multi-billion dollar operation, and they’ve got global aspirations.”
Fox asserted that TigerRisk is already trying to adapt to investment from Asia, and be ready for future deals along the way.
“We opened an operation in Hong Kong earlier this year. We see significant interest from Asian buyers, both Japanese and Chinese in acquiring non-Asian properties,” Fox said. “There are five to eight other major Asian buyers on the prowl [and] they will continue to come. That’s definitely something to watch.”