Musical chairs: more consolidation in European insurance
Mergers and acquisitions in a sector are contagious. No sooner does a major announcement get made, than other companies scramble to make their deals to. It's like a game of musical chairs, when the music stops, everyone scrambles for position.
French reinsurer Scor announced this week that it would acquire German life reinsurer Revios. The deal will be for $838 million. The new company, Scor Global Life, will be the #4 reinsurer in the world, with an 8% market share.
The announcement comes almost immediately after other major European insurance deals were announced by French rival Axa and Italian insurer Generali. Obviously, those deals did not cause the Scor/Revios deal; those companies have certainly been in negotiation for a while. But they doubtless underlined the urgency of making the deal, of avoiding being the last one standing. After all, insurance companies are the customers of reinsurers and the bigger they get, they likely will be harder to bargain with and they will want to deal with only the biggest reinsurers (only the big…)
A more close-to-home motivator may be last November's deal between Swiss Re and General Electric, where the #2 reinsurance company bought the #5 operation from GE. At a certain point, smaller companies have to react to the pressure of dominating companies in their industry, and an acquisition is the obvious reaction. In reinsurance especially, size matters, and so does global reach, as risk is spread thinner.
The top reinsurers in the world are now Swiss Re, Munich Re, and Reinsurance Group of America. Score will move from #8 to #4, not one of the prize positions in any market, but a big improvement over #8.
The urge to merge can be inspired both by deals between your competitors and also by deals between your clients.
3:22:14 PM 
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