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Swiss Reinsurance Company and GE Insurance Solutions Corporation and its subsidiaries (20/LM/Mar06) [2006] ZACT 47 (26 May 2006)
.RTF of original document
COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no: 20/LM/Mar06
In The Large Merger Between:
Swiss Reinsurance Company
Acquiring Firm
And
GE Insurance Solutions Corporation and its subsidiaries
Target Firm
Reasons for Decision
Approval
1.
On 11 May 2006 the Competition Tribunal issued a Merger Clearance Certificate approving the transaction between Swiss Reinsurance
Company and GE Insurance Solutions Corporation and its subsidiaries. The reasons for this decision follow.
The Transaction
2.
In terms of the proposed transaction, Swiss Reinsurance Company (“Swiss Re”) intends to acquire, either directly or via
one of its wholly-owned subsidiaries, the shares of GE Insurance Solutions Corporation (“GE Insurance”).
3.
According to the parties, the transaction will inter alia enable Swiss Re to enhance its overall insurance and reinsurance portfolios, thereby allowing achievement of greater diversification,
including, geographic diversification and strong direct distribution presence.
Competition analysis
4.
Both parties are globally active in the supply of reinsurance and of direct insurance. However, in South Africa, the parties’ activities overlap
only in respect of reinsurance.
5.
Reinsurance involves both life reinsurance and non-life reinsurance. Since GE Insurance is not active in life reinsurance in South Africa, the only issue for consideration is the overlap arising from
the merging parties’ involvement in non-life reinsurance. While the parties opted for a narrow product market definition i.e. the market for the writing of non-life reinsurance policies,
the Commission instead analysed both the broad market for reinsurance and the narrow sub markets for life reinsurance and non-life reinsurance.
6.
The Commission and the parties agree that the relevant geographic market is global, due to the fact that customers can source reinsurance
within international markets and are not confined to national borders. The market share data provided by the Commission is tabulated below:
| Firm |
Reinsurance market |
Life reinsurance |
Non-life reinsurance |
|
| Global |
RSA |
Global |
RSA |
Global |
RSA |
| Swiss Re |
8.1% |
35% |
10.6% |
35.35% |
7.1% |
37.7% |
| GE Insurance |
1.7% |
< 1% |
1.8% |
- |
1.7% |
< 1% |
| Post merger |
9.8% |
±36% |
12.4% |
35.35% |
8.8% |
±38% |
7.
From the table above, it is clear that the accretion in market share is relatively insignificant due to GE Insurance’s small
presence both globally and in the South African market. The Commission’s investigation revealed that customers for reinsurance
are generally direct insurers or brokers of reinsurance and are well-resourced, knowledgeable and sophisticated purchasers. Both
the Commission and the parties agree that switching from one reinsurance supplier to another is relatively easy.
8.
We do not make a definitive finding on the relevant market, as we are of the view that regardless of how the market is defined, the
merger does not raise any significant competition concerns.
Conclusion
9.
There are no public interest issues, which arise and we accordingly approve the transaction without conditions.
May 2006
N Manoim
Date
Concurring: U Bhoola and Y Carrim
For the merging parties: K de Kock and A Norton (Webber Wentzel Bowens)
For the Commission: L Lamola and S Nunkoo (Mergers and Acquisitions)
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