Banks Are in Driver's Seat.Financial-services reform places banks in a good position to acquire insurers, because they are so well-capitalized. Banks are likely to acquire insurance companies in the new era of financial-services reform, simply because they have the most money, said Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a Bonaventura, a managing director with Lehman Lehman is a common Germanic surname derived from the German word Lehen, meaning fiefdom. It may refer to: Surnames
BROS Benefits and Retirement Operations Section (King County, Washington) BROS Barnes and Richmond Operatic Society (London, UK) . While not predicting that banks would buy insurance companies, he said, "bank appetite is a developing situation." Bonaventura, who is head of the firm's financial institution for mergers and acquisitions, is credited with some of the biggest mergers of financial entities, such as Citicorp/Travelers, Ace/Cigna and Allstate/American Heritage. When trying to determine who is likely to buy whom, look at finances, he said. The 10 largest banks have a total of $550 billion in capital, with Citigroup accounting for $190 billion. Consider that the 10 largest property/casualty insurers have a total of $230 billion in capital--with American International Group
American International Group, Inc. (AIG) (NYSE: AIG; TYO: 8685 ) is a major American insurance corporation based in New York City. Inc. having $160 billion of that total--and the 10 largest life insurers have $105 billion in capital-- with the top three life mutual companies having $40 billion of that total. "Banks are the likely acquirers," he said. Foreign companies also are likely to be aggressive, because they have an enormous amount of money and want to be in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . "Aggressive doesn't have to mean hostile. It could be paying a higher price than anyone else is willing to pay" without worrying about looking like a fool, Bonaventura said. When Citicorp merged with Travelers, both sides of the business received ratings upgrades, even without any additional capital, he said. He said diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of earnings and risks was another positive byproduct by·prod·uct or by-prod·uct n. 1. Something produced in the making of something else. 2. A secondary result; a side effect. Noun 1. of the merger that helped improve ratings, which allows for greater leverage. Although Citigroup is a successful model, Bonaventura said banks are likely to be more interested in life companies because property/casualty companies--which need a large claims infrastructure--can add to costs. |
|
||||||||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion