Pent-up M&A demand to boost European insurers' shares, Berenberg says

Tryg A/S

03/08/2022 12:15

** Trends such as strong solvency, strong cash flows, and
weak organic premium growth are creating pent-up demand for
insurance M&A, Berenberg says, which may help lift European
insurers' share prices
    ** The relatively modest growth in many European insurance
markets since 2019 has helped earnings accumulate, leading to
rising solvency, which the broker says creates appetite for M&A
once business confidence returns
    ** Strong solvency levels mean European insurers have the
funds for significant M&A, and these levels are near historical
highs, it says
    ** "Insurers in countries which have recorded the biggest
shortfall in expected premium growth will likely have more
appetite for M&A to compensate for low organic growth with
acquisitions" - Berenberg
    ** Higher equity prices are broadly associated with more
M&A, as both occur in periods of rising confidence, it says,
seeing confidence as a key driver for M&A activity
    ** The weak organic premium growth may be linked to
increased income inequality, as this reduces the population
proportion belonging to the middle class, which has the highest
propensity to buy insurance, it adds
    ** Berenberg's top picks are Allianz  ALVG.DE , Aegon
 AEGN.AS , Munich Re  MUVGn.DE , Legal & General  LGEN.L ,
Admiral  ADML.L , Línea Directa  LDA.MC , Beazley  BEZG.L , and
Tryg  TRYG.CO 

 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))