The number of mergers and acquisitions in emerging markets is steady but the sums involved are rising as insurers look to such regions for expansion, according to a Guy Carpenter research bulletin.

China, southeast Asia and Central and South America are favoured markets for insurers, it says.

Last year gross written premium grew about 1.5% in developed markets but by 8.6% in emerging markets.

Demand for acquisitions is likely to exceed supply, driving up the values of target companies.

While the attractions of buying into developing markets may seem obvious, buyers must ensure returns exceed the cost of capital deployed, Guy Carpenter warns.

“The key to this is the successful implementation of an integration strategy,” the report says, noting this can be difficult when cultures and business practices differ.