LIVE MARKETS-Why more insurance M&A could be coming

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WHY MORE INSURANCE M&A COULD BE COMING

Recent M&A activity in the European insurance sector has brought several positives that, according to Berenberg, could prompt other players to pursue deals as a way to boost return on equity (ROE), a key metric for investors.

"Consolidation in the insurance industry is effective," say analysts at the German bank, citing the success of three recent transactions: ASR-Aegon, Baloise-Helvetia, and Aviva-DLG.

Berenberg notes that M&A can unlock value by increasing economies of scale, reducing costs and improving capital efficiency - benefits it believes are "encouraging all European insurers to consider M&A".

Among potential transactions, four stand out, the bank says.

Top of the list is Ageas's AGES.BR possible acquisition of Ethias. A deal would raise its Belgian non-life market share to 27% from 16% and bring significant capital synergies.

Next is ASR ASRNL.AS possibly acquiring Athora's Dutch life and pension business, a move that could deepen ASR's exposure to pension buyouts in the Netherlands.

Chesnara CSN.L, fresh from its HSBC Life UK acquisition, has firepower for another similar deal. A life back-book deal in Belgium could further lift its cash generation, it says.

Finally, Berenberg says Arch's could lift, or sell, its near 30% stake in Coface COFA.PA, which it says offers strong dividend yield and upside potential from its information platform.

(Danilo Masoni)

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