This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Life Will Lead Insurance Mergers

NEW YORK (TheStreet) -- Slowly but surely the insurance industry is consolidating, but don't look for a flurry of activity anytime soon.

The merger and acquisition environment for insurers will be driven by one-off deals, such as RSA Insurance's (RSA) recent $5 billion pound ($7.8 billion) takeover bid for Aviva ( AV).

However, industry watchers say the potential U.K deal is just the tip of the iceberg for major activity that will also spill into the U.S.

"The consolidation in the insurance industry is being driven by the excess capital insurance companies are holding," Jim Ryan, senior analyst with Morningstar told The Street.

Insurers have little opportunity for organic growth into new products or customer segments as a result of the shaky economy and new financial regulations. But with significant amounts of cash on their balance sheets, insurers are debating what is the best option for their shareholders; make a strategic acquisition or do a buyback.

Although the industry has seen its fair share of buybacks -- Aetna's ( AET) repurchase of $1 billion of its common stock being one of the most recent -- many companies are also considering acquisitions.

The life sector will be most acquisitive, says Nicholas Potter, a partner at the law firm of Debevoise & Plimpton. "There is likely to be consolidation in the life area [because] they fixed their balance sheet problems before the financial crisis," he told The Street. "There are some real buyers out there."

Resolution ( RSL) , ACE ( ACE), Prudential Financial ( PRU), AXA ( AXA) and Berkshire Hathaway (BRK.A) have all been rumored to be seeking acquisitions in the life insurance space, according to published reports.

Some experts argue that the mergers, especially in the life insurance industry, are also being prompted by divestments American International Group ( AIG) was forced into after its bailout, particularly AIG's sale of ALICO to Metlife (MET).

"What you have seen recently has really been deals driven by AIG. Those are very large transactions," says Angelo Graci, a desk analyst at Chapdelaine Credit Partners.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs