European Insurance Market Integration: A History of Cross-Border Acquisitions

The European Union's insurance market has undergone significant changes since the 1970s, with the single European market driving cross-border mergers and acquisitions in the industry. The European Commission's first non-life directive in 1973 marked the beginning of efforts to open up the insurance market. The key piece of single-market regulation, the third insurance directive, came into effect in 1992, introducing a single licence to operate within the EU.

Key Takeaways:

• The European Commission's first non-life directive in 1973 aimed to open up the insurance market, followed by a similar move covering the life insurance business.
• The third insurance directive in 1992 introduced a single licence to operate within the EU, but it wasn't until the 1980s that cross-border acquisitions gained momentum.
• Companies like Allianz of Germany, AGF and UAP of France, and Winterthur of Switzerland have been key players in the cross-border acquisition stakes.
• Although acquisition was initially seen as the easiest way to build a pan-European business, the benefits have not always materialized quickly, and the pace of acquisition has slowed.
• Companies have faced challenges, such as Hafnia of Denmark's collapse due to over-extending itself trying to acquire Skandia.
• British companies have been keen to see barriers to cross-border insurance sales removed, given the UK industry's wide product range.
• The sale of Groupe Victoire is part of a series of key ownership changes in the French insurance industry, including UAP's privatization in April.

Statistics:

• The European Union accounts for more than a quarter of the world's insurance premiums.
• Some lines of insurance business are not yet mature and are expected to expand rapidly.
• UK companies have a wide product range, with potential benefits from cross-border operations.
• 1986 saw Allianz of Germany acquire Cornhill in the UK.

Sources:

• European Commission's first non-life directive (1973)
• Third insurance directive (1992)
• Allianz of Germany's acquisition of Cornhill (1986)