Alternative capital, InsurTech, and the digital revolution are the M&A drivers of the reinsurance world

"You don't have to be big to be beautifully relevant or financially successful, but you do have to be focused," Pina ALBO, Group CEO of Hamilton Insurance Group said, addressing the question of whether bigger is necessarily better at the Reinsurance Symposium in Baden-Baden.

This year's event, hosted for the tenth time by Guy Carpenter at the opening of the annual Baden Baden Reinsurance Meeting, was themed 'Back to the past: a return to global composites.'

Despite ALBO's "no need to be big" statement, the discussions focused in fact on the visible concentration trend in the industry, induced by intense M&A activity in the past years. While acknowledging that consolidation is not a new market phenomenon, ALBO pointed out that several of the factors influencing the strategic thinking behind it have changed. She commented, "We're watching the M&A movie again, but this time around we're seeing different plot twists. There are three developments that I believe are currently influencing M&A activity today. First is the impact of alternative capital, second is the InsurTech phenomenon, and third is the entire digital revolution."

Charles GOLDIE, CEO of Property & Casualty at PartnerRe, said that M&A activity would be driven by the demands of the buyer. "M&A in the reinsurance space will eventually go where the buyers of reinsurance want it to go," he explained. "Increasingly, we see the tendency of narrowing the number of reinsurers participating in offering protection to different buyers - if previously there were 30, 40, or 75 reinsurers offering protection to one buyer with participations of 1, 2 or 3%, now there are 5-7 reinsurers covering the risk. Ultimately, this points to both further consolidation in the number of truly global reinsurers as well as need for dedicated, independent reinsurers that have the ability to be strategic partners on a meaningful scale."



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