Mergers at a premium

Most insurance companies expect consolidation processes in the industry to pick up in the coming years, according to a recently published KPMG report. Some 81 percent of large and 61 percent of smaller insurance firms are actively looking for acquisition opportunities or are interested in such transactions if the chance comes. The main motives behind consolidation are increasing market share and geographical expansion.

Asia is viewed as the region with greatest growth prospects - 58 percent of those surveyed saw it as such, singling out China and India in particular. It is worth mentioning that one-third of the respondents saw Central and Eastern Europe as the region with the largest growth potential.

Poland too will not miss out on the trend in the coming years. "Consolidation processes are inevitable because the market is fragmented," the manager of KPMG Corporate Finance Michał Tokarski said. Only four life insurance companies and five asset insurance firms have a market share higher than five percent. "There is no point in [having] so many companies present on the market," Tokarski said.

The first signs of the consolidation are already evident - Nordea took over Sampo, PZU is in the process of acquiring Skarbiec Emerytura and Winterthur is buying Dom. Austrian Wiener Staedtische has been acquiring firms actively, buying Benefia, Compensa, Cigna and Royal Polska. Tokarski expects the processes to pick up. "Those who didn't acquire new companies will look for new opportunities," he said. External factors could also contribute to further buyouts. "There are consolidation signals coming from European headquarters," Tokarski said, giving Talanx's acquisition of Gerling as an example.