Mergers to continue in Finnish insurance sector

Fusion of two large non-life insurers will speed up merger talks between employee pension insurance companies as well

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The news that came out on Tuesday of the fusion of two large Finnish insurers, the Tapiola General Mutual Insurance Company and the Local Insurance Mutual Company, is but an interlude in the ongoing saga of mergers within the insurance branch.
      In December a large issuer of life insurances was created in Finland when OP-Pohjola announced that it would take over Skandia Life’s insurance stock.
      The merger of Tapiola General and Local Insurance, in turn, will result in the birth of the largest non-life insurer in the country, with an estimated 30% share of the market.
     
Soon the Finnish non-life insurance sector will be dominated by three players, Tapiola-Local Insurance, OP-Pohjola, and If. Also in the life insurance sector there are three actors head and shoulders above the rest, namely OP Life Insurance, Nordea Life Assurance, and Mandatum Life.
      The balance of terror between just two large players in these insurance sectors is now a thing of the past.
     
This is not the case, however, in the field of employee pension insurance, where 70 per cent of the pension insurance euros deducted from everybody’s salaries will go to two large operators, namely Varma and Ilmarinen. This is not the best guarantee for efficiency, for activities usually turn efficient only after the dipole setting - with two dominant players - has been crushed.
     
Presumably the fusion of Tapiola and Local Insurance will also act as the starting pistol for mergers in the realm of employee pension companies. Very likely a company called Etera, which is going through rough times, will re-initiate exploratory contacts with Pension Tapiola and Pension Fennia.
      What is also likely to contribute to the fusion talk atmosphere is the fact that Tapiola CEO Asmo Kalpala, who is known for his independent way of doing things, will soon be replaced by entrepreneur and former politician Erkki Moisander.
      Pension Fennia’s desire to form an alliance with someone else will be increased by the fact that it will lose one of its sales channels - namely the Local Insurance branches - to its competitor Pension Tapiola.
      Even in this field, size apparently matters.


Links:
  Tapiola: Local Insurance and Tapiola to merge
  Tapiola
  Local Insurance Mutual Company
  Federation of Finnish Financial Services: Finnish insurance in 2010 (.pdf file)

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