By Ben Berkowitz and Gilbert Kreijger
The credit crisis has taken the traditional drivers of consolidation in the Dutch insurance industry out of the game, but new players are expected to step in as soon as this year and roll up a number of attractive assets coming to market.
Names like life insurer Robein Leven and multi-line insurer ASR are on the market waiting for buyers. Before the credit crisis, such assets would not have lasted long in a Dutch sector driven by consolidation.
But now, senior industry executives doubt any traditional players have the capability to roll up these properties after ING, Aegon and SNS Reaal got state aid last year.
"I feel personally nobody is in the shape at this point in time to do anything in that regard," Ronald Latenstein, chief executive of bancassurer SNS Reaal, told Reuters in an interview last week.
No one expects a vacuum for long, however. Analysts point to Delta Lloyd in particular as a potential new consolidator that could grab some of the assets on the market.
Delta Lloyd said on Aug. 6 it was making preparations for a partial spinoff from its parent, British insurer Aviva. Aviva has indicated it would prefer an IPO, with sources projecting an October or November offering of 25 percent of the business.
With that capital, Delta Lloyd has said it plans to go shopping. Institutional investors like Dutch pension funds are expected to snap up its shares when it comes to market.
"Delta Lloyd is a natural consolidator, picking up the role SNS Reaal played for years," said Jaap Meijer, an analyst at Evolution Securities in London.
SNS spent more than 4 billion euros ($5.74 billion) on acquisitions in recent years before taking a state bailout last October.
Delta Lloyd is also the most likely candidate to buy ASR, which the Dutch state bought last year when Fortis was rescued and broken up by the Benelux governments, to realise economies of scale, Keijser Capital analyst Nico van Geest said.
In that way Delta Lloyd could act something like Resolution , the British vehicle created to take over insurers. It recently agreed a deal to buy Friends Provident and plans two more acquisitions.
LITTLE FOREIGN INTEREST
Foreign parties, such as French AXA or Italy's Generali, would show little interest for Dutch insurance operations because the Dutch market showed little growth and there was little room to create economies of scale.
"Profit growth has to come from cost synergies, which result from consolidation. This makes few foreign parties interested because they cannot reach the proper size," Theodoor Gilissen analyst Paul Beijsens said.
Germany's Allianz, which bought some Dutch operations between 1998 and 2001, was, however, a potential candidate for ASR or other insurance operations for sale in the Netherlands.
"They're big in property and casualty insurance in Europe but they could expand in life insurance," Van Geest said.
Even entrenched heavyweights like the country's largest insurer, Eureko, are standing back.
It said earlier this month it plans to participate in consolidation "one way or another," but the privately held company was quick to add it has no plans to go public for the sake of raising deal currency. It also doubted there were economies of scale to be had.
