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Private equity to buy European insurance assets in 2015

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(Bloomberg) — Private-equity investors are expected to buy European insurance assets in 2015 as more companies sell non-essential businesses, according to a Towers Watson report.

About 82 percent of the 264 executives surveyed in Europe, the Middle East and Africa predict private equity to be among the top three groups of acquirers, lured by insurers’ ability to generate cash and a spate of initial public offerings, the report said. Forty-two percent said private equity is the most important source of capital.

Private-equity investment “is already at its highest level for nine years,” said Fergal O’Shea, EMEA life insurance M&A leader for Towers Watson based in Dublin. Insurers seeking consolidation, low interest rates, cash generation and a revival of IPOs “should heighten the appeal of assets,” he said.

Even so, private equity-related insurance deals in the first half of 2014 were at low levels compared with 2013, which had a record 23 transactions, the report showed. Firms in Europe have this year been selling assets, with Brit Plc and Saga Plc holding IPOs.

CVC Capital Partners Ltd. explored a bid for stakes in Dutch insurers ASR Nederland NV and Reaal NV, two people with knowledge of the matter said in June.

In the first half of 2014 there were 48 deals were announced for the insurance industry in EMEA versus 50 in the year-earlier period, Towers Watson said. The value of deals fell by more than 50 percent year-on-year, with many buyers remaining hesitant about making transformational acquisitions, according to the report.

Some 80 percent of insurance executives still expect the value of deals in 2014 to match or exceed 2013. Eighty-four percent said new capital will enter the insurance market over the next three years, helping to create more transactions.

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Your official life insurance M&A outlook for 2015