Allianz strikes £820m LV= and L&G general insurance deals to become second biggest in UK
Allianz is acquiring the remaining 51 percent of Liverpool Victoria Friendly Society's (LV='s) general insurance business that it does not already own, for up to £578 million, and taking full owndership of Legal & General Insurance for £242 million, to become the second largest general insurer in the UK.
The two transactions are expected to be completed by end of 2019.
Earlier in August 2017, Allianz purchased 49 percent stake in LV GIG in a deal that valued LV=’s general insurance at more than £1 billion.
As part of the agreement with L&G, the Legal & General brand will continue to be used in the UK general insurance market for up to three years. Once the transaction has been completed, Allianz intends to combine the Legal & General general insurance business with LV GIG.
“With these two transactions, we are pleased to demonstrate our further commitment to the UK market," said Niran Peiris, member of the board of management of Allianz SE. "I look forward to our business continuing to build on a strong reputation for technical excellence and customer centricity.”
Jon Dye, chief executive officer of Allianz Insurance, added: “We are pleased to announce the purchase of the Legal & General general insurance business which supports our commitment to establish Allianz as a leader in the personal lines market in the UK. The Allianz business is robustly capitalised, has a strong reputation for its focus on customer service and is committed to delivering the advantages of technology for the benefit of the customer.”
Dye added: “Our joint venture has been a great success and taking 100 percent ownership of LV GIG creates the best platform for taking the business forward. We have experienced the value and the culture that exists within LV GIG and we will continue to protect the integrity of these important assets.”
Steve Treloar, chief executive officer of LV GIG said: “Over the last few years, we’ve successfully grown our business to become a major household name and the addition of Legal & General’s general insurance business further strengthens our position. Once the business transfers to LV GIG we’ll have over 7 million personal lines customers, a gross written premium of over £2 billion and be a major player in the UK personal lines market.”
Rating agency Moody’s views this move as "credit positive" for both Allianz and L&G, and maintains a stable outlook on the UK P&C sector as "robust capital offsets profit pressure from claims inflation and possible regulatory costs".
"It will strengthen Allianz’s presence in the UK within the P&C sector, becoming the second largest player, and will allow L&G to focus on its core life market," said Moody's.
According to Andrew Holderness, global head of the corporate insurance group at Clyde & Co.: "The recent Allianz deal announcements are evidence of two trends in a bifurcated market that we have been tracking for some time. At the top end of the market the larger players are actively on the acquisition trail as they look to build scale and to broaden their offering to reach new customers and markets to drive growth. Meanwhile, at the other end of the market, some businesses remain under pressure following years of difficult trading conditions.
"The recent signs of market hardening are a case of ‘too little, too late’ for many who now are looking to dispose of non-core operations. These trends are set to continue to drive M&A activity. After a busy 2018, which saw a 9% increase in the number of completed deals worldwide, we saw a relatively slow first quarter this year but expect a pick-up in deal-making in the coming months."
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