Editor's Comment: The era of mega deals

Big deals are nothing new but with a PWC study this week suggesting those firms that are not taking part in the M&A wave could be vulnerable to takeover themselves, it begs the question as to what the insurance market might look like if this continues.

Both Catlin and Chubb have been gobbled up in the last nine months, leaving only Hiscox, Novae, Lancashire and Beazley left in that ring. But what if these firms also disappear?

Commentators suggest that the trend may slow for a while as expectations for share prices are so high now. However, if that is the only factor, then the pause may not be for long, especially as investors from other industry backgrounds or offshore investors are showing an interest.

While experts say the Mitsui and Amlin deal demonstrated confidence in the London market, is there a real danger now that the market could be too consolidated? Will the London market still be the London market if it is comprised of global corporations rather than more agile, smaller firms?

The fallout of big deals is often that start-ups develop from merged companies. However, if the domination by the big boys goes too far, will there still be room in this new market structure for these to compete or will this be the death of true choice in this sector?

One of London’s strengths against competing markets like Bermuda is its vitality but if mergers continue, it may lose this. So maybe instead of feeling pressure to join the M&A dance, executive teams should take the time to focus on developing their own organisations’ strategy rather than making themselves an even bigger target if they jump into a game they haven’t read the rules for.

Just because someone else started it first doesn’t mean other insurers need to finish this or there is a chance they could be finishing something else – like the rich, vibrant and competitive history of the London market itself.