2023 to see spike in M&A in Middle East insurance market

Regulators seeking further consolidation and international exits or strategic acquisitions will be key drivers

Despite the threat of a recession, the M&A market in the Middle East and the insurance industry is still very active.

The Central Bank of the UAE has recently merged and incorporated the Insurance Authority. The CBUAE as resulting authority is currently pushing for higher standards and regulation across the industry. This is impacting all those in regulated sectors as they are likely to come under more scrutiny in order to ensure a more reliable and compliant market to attract further investments and guarantee stability and consumer protection.

It will also lead to further consolidation in the industry as players look to make strategic acquisitions. Insurance brokers and third-party administrators (TPAs), in particular, have been attractive acquisition targets for international groups in the last year as enablers to operate in the region without having to apply for licenses from scratch.

However, in the general insurance market some foreign players have started to exit the market as they look to plug gaps in other jurisdictions where they operate. This will open up the market further to local and regional players to acquire those businesses and also, increasingly, run-off businesses which have grown in popularity across the region, particularly in Egypt and Saudi Arabia.

Meanwhile, the Central Bank of the UAE has signed a memorandum of understanding with the Saudi Central Bank (SAMA) to cooperate on the supervision and regulation of the insurance sector in both countries. This MoU will reinforce, improve and homologate the regulations and approach of the authorities with regard to regulated businesses such as insurance companies and insurance brokers. As a first step, CBUAE has issued in the past weeks a new set of corporate governance regulations and standards for insurance companies (conceptually aligned with the SAMA corporate governance regulations) and is expected to issue specific ones for insurance brokers as well. This general trend shall lead to better, clearer and more pervasive regulation across the industry and supposedly have a positive impact on the volume and size of M&A deals.

View all our Insurance 2023 Predictions here