Mergers, acquisitions to increase in 2006-07: U.S. study

Insurance industry mergers and acquisitions increased in 2005 to the highest level since 2001 and may foreshadow an acceleration of activity this year and the next, according to a new study by Hartford, Connecticut-based Conning Research and Consulting, Inc.The study is entitled: Mergers & Acquisitions and Public Equity Offerings-Fasten Your Seat Belts!”There are a number of factors that lead us to expect a continuing increase,” Stephan Christiansen, director of research at Conning Research & Consulting, said in a press release about the study.”The insurance industry is growing capital faster than revenues, and while revenue growth is anemic, prospective profitability appears relatively solid,” Christiansen said. “Stock performance for the industry has been relatively strong as well, with each of the sectors outperforming the S&P 500 from 2002 through 2005. In addition, we believe advantages of scale are increasing in the industry for a variety of reasons.”Christiansen said M&A transactions in 2005 increased to 324, and total values of these transactions grew to US$50.8 billion, exceeding 2004 levels. “Public offerings, including secondary offerings, were strong in property-casualty but declined in all other sectors,” he said.