European life consolidation activity picks up

Written by Adam Cadle

09/09/2022

European life consolidation activity picked up following a slow start to 2022 with four acquisitions announced within less than two months, Fitch Ratings has said, bringing the year-to-date deal volume by liabilities to around €60bn.

Of the recent deals announced, two were in Germany, with one each in the Netherlands and the UK.

Fitch said it expects the proportion of life consolidation transaction volumes with EU markets to rise, while UK volume growth will be lower given the large volumes seen since 2016. The UK was the dominant market for such deals from 2016 to 2019, with around 77% of life liabilities transacted in European consolidation deals. However, this dropped to 25% after 2020, while the contribution from transactions involving German liabilities rose to 30%.

According to Fitch, the strong drivers supporting consolidation in European life insurance markets remain intact, and it does not expect a high interest rate environment to materially affect the merits for buyers and sellers. However, forecasting market volumes on a calendar year basis is difficult as they may be skewed by a handful of large deals. Since 2016, 19% of transactions amounted to 76% of liabilities transacted.

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