Growth through mergers and acquisitions will be key in order to guarantee the competitiveness of Italy's insurance companies on the international stage, according to Carlo Cimbri, chief executive at Italian insurer Unipol.
Growth through mergers and acquisitions will be key in order to guarantee the competitiveness of Italy’s insurance companies on the international stage, according to Carlo Cimbri, chief executive at Italian insurer Unipol.
“In our industry, companies will either grow or step back,” he said, speaking recently at an industry event.
To support the statement, Cimbri said that in the current economic scenario, growth through acquisition is necessary to adopt a long term strategy and to gain stability, as well as to achieve economies of scales and a greater portfolio of assets.
“Risks are higher today. Synergies, economies of scale and substantial assets are necessary to survive in a market which is now highly based on finance and on access to financing,” he said.
Unipol recently announced the acquisition of holding company Premafin, which has given the group control over troubled rival Fondiaria-SAI.
Back in January, Unipol agreed to rescue Fondiaria in a complex deal which included a four-way merger and three capital increases, which was strongly supported by Italian banks Mediobanca and UniCredit, creditors of the Fondiaria group.
The chief executive warned that one of the biggest changes occurred in financial markets over the last five years has been an increase in government bonds’ risk, the backbone of an insurance company’s portfolio.
According to Cimbri, Italy’s insurers have strong qualities, but have not been able to leverage on them during the crisis. They should invest on niche markets and find M&A opportuniites with smaller companies that need a bigger partner in order to become competitive at global level.
Finally, Cimbri added, the consolidation trend will not be limited to the insurance industry.
“Italian financial institutions should grow to become competitive at European level and the current moment of crisis is creating opportunities for companies to consolidate their market position. Interesting opportunities for acquisition are not limited to Italy,” he said.