ICCC approves shares acquisition

THE Independent Consumer and Competition Commission (ICCC) says it has approved the proposed acquisition of shares in Pacific Re Ltd (Pac Re) by Motor Vehicle Insurance Ltd (MVIL).
The commission, in a statement, noted that the approval was given last Monday.
On July 16, MVIL submitted a clearance application to ICCC seeking approval (on competition grounds) to proceed with the acquisition of shares in Pac Re that were held by “class B” shareholders.
After taking into consideration all stakeholders’ comments during and upon completion of assessing the application, ICCC was satisfied that the proposed share acquisition would not have, and would not be likely to have, the effect of substantially lessening competition in the market for reinsurance services in Papua New Guinea.
Among other considerations, the ICCC’s basis for giving clearance were as follows:
lThe barriers to entry and expansion are unlikely insurmountable.
The recent entry of Bank South Pacific (BSP) into the insurance industry supports this view and tends to counter claims at entry would be difficult;
lThere also appear to be substantial opportunities for supply-side substitution by existing insurance firms into re-insurance.
The ICCC has no information that suggests that insurance firms based in PNG cannot offer “assumed reinsurance” products apart from their other insurance products.
The only issue for the insurance firms would be having strong capital base; but this can be achieved by switching products if the demand for reinsurance increases; and,
lWhile is it understood that insurance firms must seek exemption from the Office of the Insurance Commission (OIC) to reinsure outside of PNG, the fact that this option is available to them demonstrates existence of import competition.