Almost one third of respondents regard national and foreign regulation as a barrier to acquisition activity according to KPMG International.
The Economist Intelligence Unit interviewed 200 respondents from life and non-life companies, who also cited a lack of attractive targets (54%), seller's price expectations (52%) and a lack of financial resources (33%) as barriers to preventing them from investing more in mergers and acquisitions.
Seller's price expectations had led to 24% of them actually pulling out of acquiring a particular company.
The survey also found some skepticism noted among senior management in the industry as to the added shareholder value of acquisitive growth.
Despite these difficulties, 71% of respondents said they expected consolidation within the global insurance sector to accelerate over the next three years as the industry anticipates an increasingly competitive environment both from new entrants and through customer demand.
Francesca Short, insurance partner, KPMG Transaction Services said “There are a number of reasons why the industry should expect wide-ranging consolidation in the insurance market, some of the most compelling of which include capital efficiency and growth opportunities.
"However, as the survey demonstrates, insurers must be prepared to overcome a variety of obstacles first, including regulation in their own countries and abroad.”
“The downturn in the equity markets had a five year impact on M&A activity in the insurance sector. Now that balance sheets have largely been repaired, insurers can react in a largely positive fashion to the opportunities open to them in the market.”
KPMG commissioned the Economist Intelligence Unit to prepare research for a report entitled Run for Cover? M&A appetite and strategy in the global insurance industry.
The full report can be viewed here
