Europe's biggest insurance companies are increasingly looking to grow their businesses overseas in less developed markets, according to a survey by consultants Andersen.

Many chief executives within Europe's top 50 insurance companies view expansion within developing countries as key to their companies' future success, said the report entitled The Hidden Power of Europe's Insurance Giants.

The report also reveals that acquisition is the preferred method of growth for these top insurers whose interest is to maintain and develop their international power.

Eamonn Rice, head of Andersen's UK insurance practice, said: “Insurers have to demonstrate that capital is being well used to support sensible business growth. Leaving capital unutilised is not an option.”

He also added: “Geographical expansion can come through alliance, joint venture or acquisition, but while payback on acquisitions is a medium term issue, it is by far the most logical use of capital for today's market.”

Rice said many of the companies surveyed had international growth strategies that favoured less-developed economies, seeing them as having more potential, rather than attempting to grow within Europe.

Some of the less developed markets sought by European insurers are China, Poland and Brazil.

However, Rice said that being big in itself was no longer enough for most large insurers, as they also needed to expand their product range and customer base.

They are therefore moving into new areas in addition to their core insurance activities, such as banking services and asset management.

Rice said: “These product areas are seen as not only bringing in additional revenue, but also as exposing the companies to a greater number of potential customers.

“What matters to European insurers is reaching the customer in any way they can. The buying and selling of financial services is moving towards an open architecture where some companies may manufacture their own products and sell them through a variety of channels, while others may simply distribute others' products.”

He said there was widespread adoption of a multi-channel strategy – using intermediary brokers and agents, telephone and internet sales as well as selling insurance products through banking channels.

Andersen interviewed the chief executives of 26 of the top 50 European insurers.