The first nine months of 2010 have seen a significant upsurge in M&A activity in the insurance sector in Southeast Asia (and beyond) as established players look to the region for growth opportunities, whilst domestic consolidation continues. Most high profile was Prudential's planned acquisition of AIA on which Herbert Smith acted for the underwriting banks.
In addition to this, changes to rules on capital adequacy requirements in a number of jurisdictions in Southeast Asia have acted as a stimulus for greater inward investment as local players look to raise capital through strategic investments, joint ventures and disposals.
For foreign investors targeting the Asia insurance markets, the Prudential deal brought into focus
some key areas of concern, in particular:
- foreign investment restrictions;
- local competition regimes; and
- the approach of home regulators to protecting domestic financial strength and restricting
Based on our experience, we touch on each of these areas briefly below for the key markets of Singapore, Indonesia, Malaysia and Thailand, including discussion of some recent changes to the regulatory landscape in each of these jurisdictions.