Fosun Interview

Strategic Planning of German Market

Resource:

Interview with runoff CEO

 

After the successful acquisition of German private bank H&A by Fosun Group last year, the acquisition of the runoff platform has also been approved by German regulators. Germany is the most regulated market in Europe with the longest approval process, but it is also the place where Fosun Group pushes forward its strategic development. Therefore, at the annual meeting, we sat down and had a talk in good faith with the bank’s head Christian on a range of issues, such as regulatory approval and future development.

 

Q:  BaFin recently approved Frankfurter Leben's takeover of Basler, how long did it take for the regulatory approval process and why?

 

  • It took basically 12 months. This was mainly for two reasons:

1) We were the first approved Run-off Deal and

2) We were the first approved deal under the new Solvency II regulatory regime, which took effect on January 1.

  • We were therefore breaking new grounds, hence BaFin had to deal with a lot of new topics which took some time.

 

Do you expect to have more consolidation in life insurance sector and run-off business, why is that?

 

  • We estimate the total market available for Run-off transactions in Germany to be around € 300bn. We want to have between 10% - 30% of that market.

 

  • Consolidation will increase due to three factors:

1) Solvency II capital constraints,

2) Low interest rate environment,

3) Different new business focus.

 

  • Window of opportunity is 12 – 36 months, i.e. 2017 – 2019 are the key years for making transactions..

 

  Can you elaborate further regarding your future M&A plan?

 

  • We have a very full pipeline. We expect to close at least one transaction in 2017 and further transactions in 2018.

 

Do you have a regional focus or are you planning globally for expansion?

 

  • We currently have a clear focus on Germany. We expect to build out the German platform over time into a continental European platform.
  • We do not have the intention at this point in time to expand globally in the foreseeable future. We got our hands sufficiently full with our current growth plans

 

 

What are the major integrations you are looking for after joining the Fosun family? Have you talked to other portfolio companies?

 

  • We have two major goals:

1) Operational integration and streamlining of the newly acquired companies,

2) Building out the asset management capacities of the Run-off platform

  • We have talked to a lot of other companies, especially the asset management entities. We have already set-up contracts with some of those entities

 

Whatareyour main business objectives in 2017?

 

  • Two major objectives:

1) Operational and asset management set-up,

2) Close further acquisitions