Friday, March 23, 2018

Asian insurance M&A collapsed in 2017

The volume of completed insurance M&A deals in Asia fell 42% in 2017, principally due to foreign currency restrictions and regulatory uncertainty in China, according to a new report by Clyde & Co.

The Chinese government’s plans to reduce investment limits for foreign insurers remain on hold, generating further uncertainty in the market and hampering deals.

However, the report highlights the potential for any lifting of China’s supposedly temporary foreign currency restrictions to trigger a release in pent-up demand for capital flows both in and out of the country — which could lead to a flurry of deals in 2018.

“The regulator in China is moving to create a better regulated market that is governed in line with international norms and best practices,” said Michael Cripps, Chongqing-based consultant to Clyde & Co Westlink JLV. “This will benefit policyholders and investors alike and open the door for more transactions once the new rules have bedded in.”

Globally, there were 350 completed M&A deals in the global insurance sector in 2017, down from 387 the previous year. However, the second half of the year showed an uptick in deals for the first time since 2015.

The number of deals in Asia fell to just 42, down from 72 in 2016.

The report predicts that Japanese acquirers will continue to focus on overseas targets in 2018 while South-East Asia remains on the radar for foreign investors.

Interest in India increased in 2017 after changes in statute and regulation opened up the market to foreign entrants. Further legislative changes expected in April 2018 may accelerate the arrival of international players.


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