European insurers looking to strengthen their market positions in 2025 will likely make acquisitions in a model that Generali and Sampo did this year, according to a new report from Bloomberg Intelligence published Thursday.
Kevin Ryan, Bloomberg Intelligence senior industry analyst for Insurance, said that those smaller insurers that are looking to augment their market positions next year will probably take on the acquisition strategy that Generali and Sampo adopted, avoiding the risk involved in larger deals.
In January, Generali acquired Liberty Seguros for €2.3 billion, securing its market positions in Spain and Portugal and propelling the company to become a top 10 insurer in Ireland. Sampo’s acquisition of Topdanmark in September also helped the company secure its position as the leading non-life insurer in the Nordic region, Ryan said.
The situation being faced by Admiral and Direct Line is also likely to be experienced across the industry, Ryan said.
Direct Line, which has been struggling to rebuild profitability, earlier announced that it has reached a preliminary agreement to recommend a takeover by Aviva in a sweetened 3.61-billion-pound deal.
“Direct Line’s woes saw its shares trade as low as 0.86x historic book value, attracting unsolicited bids from Ageas in March and Aviva in November,” Ryan said.
Contrast that with Admiral, a long-time UK auto insurance leader that continues to post strong profit progress despite increased regulation.
Still, Ryan said that the lack of data makes comparisons challenging, especially since many companies offer various business lines with limited disclosures by business line.
Meanwhile, the increase in insurance and reinsurance rates at specialist insurers since 2019 has continued but there are now signs that it is slowing down and in some cases, reversing.
“The relatively unpredictable outlook and the potential volatility in profit could encourage consolidation within this specialist area of the insurance world,” Bloomberg Intelligence said.
