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Solvency II: A Driver for Mergers and Acquisitions?

Author

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  • Rayna Stoyanova

    (International Center for Insurance Regulation, Johann Wolfgang Goethe-University Frankfurt am Main, Grüneburgplatz 1, Frankfurt 60320, Germany)

  • Helmut Gründl

    (International Center for Insurance Regulation, Johann Wolfgang Goethe-University Frankfurt am Main, Grüneburgplatz 1, Frankfurt 60320, Germany)

Abstract

The European insurance industry is awaiting the new EU-wide harmonised Solvency II framework. Before its introduction, it is important to find out which incentive effects can arise from it. Practitioners predict a trend towards consolidation in the insurance sector due to recognition of geographic diversification effects in Solvency II’s standard formula. This paper studies whether the new European regulation standards will constitute a driver for mergers and acquisitions in the non-life insurance sector. We identify situations in which consolidation becomes profitable. Our results indicate that the Solvency II framework may lead to an enhanced geographic restructuring wave. However, the profitability of this restructuring depends strongly on the correct estimation of costs and the characteristics of the consolidation partner chosen.

Suggested Citation

  • Rayna Stoyanova & Helmut Gründl, 2014. "Solvency II: A Driver for Mergers and Acquisitions?," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 39(3), pages 417-439, July.
    • Handle: RePEc:pal:gpprii:v:39:y:2014:i:3:p:417-439
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    Citations

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    Cited by:

    1. Thomas Url, 2014. "Schwaches Wirtschaftswachstum dämpft 2013 Privatversicherungsgeschäft," WIFO Monatsberichte (monthly reports), WIFO, vol. 87(9), pages 609-618, September.
    2. Mirjana Ilić & Veselin Avdalović & Milica Obadović, 2017. "Survey Of The Readiness Of Insurance Companies In Serbia For Solvency Ii," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 62(215), pages 169-204, October –.

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