The insurance industry has faced major challenges through the financial crisis, with declining asset values and increased credit risk putting pressure on capital buffers. Regulatory change is also a key issue in many parts of the world.
For the life insurance industry low interest rates and high capital requirements are impacting on profitability and driving business decisions. For insurers in Europe, the implementation of Solvency II is now underway.
With asset values low and regulatory uncertainty high globally, we expect to see opportunities for M&A, whether as a result of insurance companies divesting their non-core assets or others, such as banks, selling their insurance arms. There has been increased private equity interest as buyers and sellers. Raising or optimising regulatory capital remains a key issue and we expect to see liquidity (starting with the banks) potentially driving M&A. This current environment provides an excellent opportunity for insurers both to plug the gaps left by banks with alternative investments – for example in infrastructure, and also to provide liquidity to banks via liquidity swaps.
Throughout these developments our insurance team has advised insurance companies, investment banks and other financial institutions on various actions to manage assets and liabilities and mitigate larger risks. We have been active in advising on M&A, distribution arrangements, bulk purchase annuity work and longevity transactions. Our longevity work was recognised by our winning the Most Innovative Firm in Corporate Law award at the Financial Times Innovative Lawyers Awards 2012 for our longevity deals for pensions funds and pension solution providers.
Our clients gain the benefit of expert advice from global specialists in corporate insurance, M&A, litigation, restructuring and insolvency, capital markets, tax, employment and regulatory matters.
We continue to lead the market through innovation in relation to structures which achieve the right effect both under current regulations and Solvency II. We have advised on capital raising, including contingent loan transactions, rights issues and on hybrid capital and senior bond issues.
To discuss legal issues with Linklaters’ global insurance team, please contact Victoria Sander, Wolfgang Krauel, Matthew Middleditch, Scott Sonnenblick or Duncan Barber.
Recent insurance transactions include advising:
- Friends Life Group on the £5.6bn recommended takeover by Aviva
- AXA on the acquisition of a controlling interest in Nigerian-listed composite insurance company Mansard Insurance PLC
- Athene Holding on the acquisition of the Delta Lloyd Deutschland group
- RSA on the sale of the Italian branches of Royal & Sun Alliance Insurance plc and the Sun Insurance Office Limited to ITAS Mutua
- Aviva on the sale of its Turkish non-life insurance business to a private equity consortium
- Ageas Group on the sale of Ageas Protect Limited, its UK life protection business, to AIG Europe Holdings Limited
- Citibank on its bancassurance agreement with Zurich in the Middle East
- PZU S.A., Poland and the CEE's largest insurance company, on the sale of their Lithuanian subsidiary UAB DK PZU Lietuva to Norwegian insurer, Gjensidige Forsikring ASA
- Scottish Power UK Plc on the £2bn longevity swap entered into by the Trustee of the Scottish Power Pension Scheme with Abbey Life