Allianz Seals Deal with Turkey’s Yapı Kredi for Insurance Acquisition/Distribution

Germany’s Allianz announced that it has reached an agreement with Turkey’s Yapı Kredi for a 15-year exclusive distribution agreement and for Allianz to acquire Yapı Kredi Sigorta, the property and casualty insurer, including its subsidiary Yapı Kredi Emeklilik, the life and pension business.

“Yapı Kredi Sigorta is the 5th largest property and casualty insurance company in Turkey with total premiums of €531 million [$681 million],” said the announcement. “Yapı Kredi Emeklilik holds a top-4 position in life insurance with premiums of €90 million [$115.5 million], with a pensions business ranked 3rd with assets under management of €1.5 billion [$1.925 billion].

“The combination of Allianz Turkey with the Yapı Kredi insurance operations will create the number 1 non-life insurer, the number 2 pension provider and the number 3 life insurer in Turkey, a strategically important market for Allianz where the group has a 90-year history.”

Allianz explained that under the terms of the agreed transaction, it “will acquire Yapı Kredi’s 93.9 percent shareholding in Yapı Kredi Sigorta for a total net consideration to Yapı Kredi of €684 million [$877.6 million]. The remaining 6.1 percent of Yapı Kredi Sigorta is listed on the Istanbul Stock Exchange and will be subject to a mandatory tender offer by Allianz shortly after closing. Yapı Kredi will retain a 20 percent stake in Yapı Kredi Emeklilik, the life and pension business which is a subsidiary of Yapı Kredi Sigorta, to support the long-term strategic partnership with Allianz.”

In addition, as an “important part” of the deal, Allianz and Yapı Kredi have concluded a “15-year bancassurance agreement, which will provide Allianz exclusive access to the 5th largest banking network in Turkey with 928 branches and 6.5 million customers.”

Oliver Bäte, member of the board of management of Allianz SE, described Turkey as “one of the fastest growing insurance markets worldwide, supported by a robust economic outlook and a large, young population of 75 million people.”

He said the “transaction with Yapı Kredi is a unique opportunity to move into a market-leading position in one of Europe’s key growth markets which is also an important bridge between Europe and Middle East/Central Asia. This transaction fits perfectly into Allianz’s strategy to use bolt-on acquisitions to strengthen its position in growth markets.”

Yapı Kredi CEO Faik Açıkalın explained that the Turkish insurance sector has become one of the most prominent markets in the world in recent years also thanks to Turkey’s sound macroeconomic fundamentals.

He added that “during the sales process, both Yapı Kredi Sigorta, which enjoys a pioneering position in the insurance sector with its performance, and Yapı Kredi Emeklilik, which has a significant place in the lives of its customers with the added value it creates, received considerable interest from several strong international institutions. We are pleased with having reached an agreement with Allianz at the end of this process.”

In terms of future development, Allianz pointed out that the Turkish market “offers significant growth potential for insurance due to low penetration, with premiums at just 1.3 percent of GDP in Turkey compared to 7.9 percent for Western Europe and 2.6 percent for Central and Eastern Europe.

“In the last five years (2007-12) annual premium growth has averaged 12.5 percent in P&C, 14.2 percent in life insurance and 35.1 percent in pensions. In recent years bank distribution has become the dominant channel for life and pension products with banks representing 77 percent of life premiums in 2012 in Turkey.

“The transaction is expected to close during the second half of 2013 and is subject to regulatory and competition board approvals.”

Source: Allianz SE

Topics Mergers & Acquisitions Europe Property Casualty Allianz