CEE Insurance M&A Outlook
Momentum is picking up
About the study
Leveraging on the success of the 1st release of the CEE insurance M&A study, we decided to continue our research, provide intelligence on insurance market trends and present the recent M&A activity in the CEE region.
Although the consolidation has started in some of the markets, most of them are still fragmented in both, life and non-life segments. There are a relatively high number of insurance companies with less than 5% market share in many countries, which signals a need for further consolidation.
Besides market dynamics, the new regulatory requirements such as Solvency II and the introduction of IFRS 17 are likely to make insurance business more capital extensive thus requiring robust profitability. The market is heavily working towards the implementation of IFRS 17, which is expected to bring substantially enhanced transparency via standardization of financial statements and consequently reducing costs of M&A.
CEE Insurance M&A Outlook
Key Findings of the Study:
- Despite the slight decrease of total gross written premiums (GWP) of the Polish market last year, the total CEE market GWP managed to grow by 2.0% year over year in 2018.
- GWP growth was driven by the continuing expansion of non-life insurance, while the life-segment continued to decline in line with the trend of previous years.
- The regional economies continued to record healthy economic growth accompanied by further improving labour market conditions.
- The average GWP penetration (GWP compared to GDP) remained stable over the examined period.
- 2018 was the first time since 2012 when the total CEE market loss ratio (paid claims to GWP) increased above 60%.
The continued exit of large international groups from CEE markets and the acquisitive growth of major market players are additional key factors boosting momentum for transactions and market consolidation.
- Balázs Mérth, Partner, Regional Insurance Industry Leader, Financial Advisory
About the previous study
Recent performance of the insurance industry in CEE has been reassuring, the average penetration (GWP compared to GDP) remained stable over the last three years with paid claims increasing the same time. These positive dynamics were fostered by stable economic growth accompanied by improving labour market conditions in the region.
Besides insuretech solutions, another long-awaited trend picking up momentums market consolidation, which is driven by non-core exits and acquisitive growth strategies to reposition business and optimize economies of scale.