"CVC/Apollo's recently announced exit from Brit encapsulates the trend that increasing buyer demand is facilitating PE exits. This follows other high profile PE exists such as Bregal Capital’s successful sale in 2014 of Canopius to Sompo Japan Insurance Inc and wider non-PE, strategic transactions such as the XL/Catlin deal. Other insurers are making moves after a significant period of restructuring - Aviva/Friends Life is a great example of this - and consolidation is likely to continue through 2015 and some of the deals may be catalysts that accelerate further M&A activity.
At the smaller end of the market, regulatory/capital requirements are driving some transactions but I think this is less of a driver for the larger deals which appear to be more driven by commercial and strategic reasons. There is still some regulatory uncertainty for the largest players with the possibility of evolving global regulation and capital standards and this may act as a drag on big ticket M&A activity. However, industry sources indicate that whilst transformational deals may be unlikely due to the shifting global regulatory landscape, there is now more certainty around Solvency II and a greater appetite to do deals, as large insurers can't hold fire forever when organic growth is slow due to falling premiums in some traditional product lines and markets, combined with low yield and low interest rates on the investment side."
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