The M&A trend in the Bermudian market is set to continue heading into the new year as companies feel the need to grow bigger to compete with others, Bermudian-based law firm Appleby told Asia Insurance Review.
Mr Brad Adderley, Partner at Appleby, said given the rate of deals being done amongst Bermudian players, it would not be surprising that others who have not been involved would eventually follow suit.
“You have Axis for example and after they failed to get Partner Re, would they be going out to do something? Do we see someone like Arch do something, or would Validus feel they’re too small now and decide to do something?” he said.
“I think there will be a few more deals to be done.”
Best deals are those where new business or platforms are added
He added that companies may want to look beyond scale when they decide on potential M&A deals.
“Some of the deals are just mixing apples with apples, I’m not really getting a new book of business but just a bigger balance sheet. If I’m just being bigger, there’s greater pressure on the assimilation of the business and getting that
right.
I think the best deals are when you are able to add new business or platforms and expanding your network – mixing apples with oranges.”
Mega deal not too far away
Going forward, he expects to see increased activity in terms of share buybacks and M&A deals, and believes a mega deal is not too far from the offing.
“I’m not sure when it is going to stop, you see ACE combining with Chubb and they’re big players, so it essentially means that everyone is in play. I think you will continue seeing M&As especially if insurance rates remain where they are,” he said.