Takeover fever hits UK professional indemnity insurance industry

While the UK general and commercial insurance industry usually exhibits the kind of torpor associated with large, staid corporate entities, there has been a flurry of activity as of late.

Spearheaded by the Prudential’s ultimately fruitless efforts to land a major deal in the Asian markets earlier this year, other general and business insurance providers in the UK have joined in.  The rejection of RSA’s £5 billion offer for Aviva has been in the public eye recently as well.  Mark Wood’s firm specialising in pensions, can be added to the names up on the auction block.

Industry experts have said that there will be more activity likely in the months to come, most likely from RBS as it sells its insurance division as it has been ordered to do so by the European Commission.

The current insurance market has been viewed by experts as a prime target for consolidation efforts.  Investment firm Resolution partner John Hack stated that investors are looking for the opportunity to reset the insurance industry due to high costs and heavy demands on an already small profit pool.  Scale does indeed matter, added Mr Hack, concluding that respectable returns can be achieved with the right team of management personnel.

Resolution is no stranger to consolidation, as it was recently acquired by the life insurance division of AXA, shortly after being bought out by Friends Provident in 2009.  The firm is steadily growing, and expectations are high that it will be able to announce an additional deal by 2011.  It is also considering the acquisition of an asset management firm as well.  CEO for the firm, John Tiner, would not comment with any specificity in regards to target dates or firms, but did go on record stating that there has been a great amount of interest generated by recent events.

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