The Russian insurance market consists of — despite the ongoing disappearance of insurers due to more regulatory rigor as well as slightly increased M&A activity over the last 12 months — still over 900 insurers.
However, given the tremendous growth of the large and larger Russian insurance companies in recent years, the market is already fairly concentrated, which is reflected by the fact that the 10 largest insurers account for almost 50% of total written premiums.
Given the fact that most insurers have insignificant market shares and that the large players drive market developments, size becomes more of an issue going forward. As a result, many owners will be faced with the question as to how to secure the long-term prospects of their insurance business. Similarly, the Russian insurance regulator has an interest in making sure that the Russian insurance industry gains strength. Moreover, the Russian business community will move — over time — away from pursuing various business interests simultaneously (‘conglomerate approach’) to holding on to businesses where they have strong competitive advantages (‘core competencies approach’). Accordingly and as a result of these three driving forces (subcritical size, increased regulatory pressures and a focus on core competencies), it is expected that the Russian insurance industry will see much more M&A activity over the next few years. If disposals, acquisitions or mergers are considered, however, it is advisable to go about it in structured way. This article describes how a professionally managed sales process is structured and which factors need to be emphasised.
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