Factors to Consider in M&A of Life Insurance Companies

Business Times interviewed 3 industry key players on the M&A and pricing of life insurance companies. Some of the key points mentioned were:

• Net asset value and price earning ratio are not the best tools.
• Complex and specialised skill set is required to assess the company's intrinsic value.
• An acquisition includes buying into the past and future of a business.
• You can be buying a problem that has not been identified yet, like high claims.
• It includes buying over the distribution channel such as the agency force.
• Life insurance business is capital-intensive and with a long gestation period.
• Local regulations are less attractive for foreign acquirer: ownership capped at 30%/49%.

Source: Business Times