Regulatory changes driving mergers

Regulatory changes in the Malaysian market are driving mergers and acquisitions activity, according to a report in the latest BestWeek Asia-Pacific. Malaysias transition to a risk-based capital system in the conventional insurance sector and an upcoming extension for takaful or Shariah-compliant insurance operators is setting the table for new development in the market under a stronger financial framework, Hans De Cuyper, chief executive of Etiqa Insurance & Takaful, told BestWeek Asia-Pacific. More of the smaller players, particularly in the non-life sector, are expected to become takeover targets, said De Cuyper. The RBC requirements will encourage smaller insurance companies to merge with bigger players, given the difficulty in raising additional capital under the new regime, he said. Malaysias insurance market has its appeal to foreign investors, compared with other countries in Asia. Fast-growing markets like China, India and Indonesia have great potential but are associated with significant risks and are less structured. De Cuyper said developed markets like Japan and South Korea are relatively saturated. Also featured in BestWeek Asia-Pacific is part two of an A.M. Best special report on takaful regulation in the countries of the Gulf Cooperative Council. This week, the regulatory schemes of several markets, including Qatar, the United Arab Emirates and Saudi Arabia, are highlighted.