PwC FS Point of View

Fortune favours the brave – Early acquirers will shape the future Middle East insurance market

Whilst the data from 2012 and 2013 includes some sizeable insurance deals in the region, some deals are not materialising because of a gap in expectations between buyers and sellers in terms of pricing, culture, and M&A process. Most of the insurance businesses in the ME are either government or family owned and often culturally less receptive to M&A, or the businesses may not have matured enough to go through an M&A process. Some shareholders may be holding out for an unreasonable price, or are being poorly advised.

To promote M&A in the region, regulators can play a catalyzing role. A number of ME insurance regulators have made encouraging comments about the need for consolidation in their markets. Prospective acquirers would welcome more affirmative initiatives, such as tax incentives and transitional flexibility on solvency, a loosening of the rules on foreign ownership of insurers, and a comprehensive takeover code that addresses minority shareholder positions amongst others.

With the right level of discipline and flexibility by each of the ME insurance industry participants and regulators, the market and consumers stand poised to benefit from a series of value enhancing deals.