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Reinsurance M&A as a form of market timing

June 28, 2007

Analysis of:S&P Examines Reinsurance M&A | www.insurancejournal.com

If a book of reinsurance business can be purchased for a price that rpresents the present value of estimated future cash flows of that book, it could be a preferred way to buy market share, given that the price of growing in the reinsurance business can include quoting new accounts at less-than-break-even pricing. Reinsurance picing, while still arguably adequate, has come down from recent peak levels, and the incentive to move renewals from one reinsurer to another usually includes price competition.

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