Abu Dhabi, UAEMonday 14 October 2019

Allianz expands in UK insurance with $1 billion of deals

New deals will take the German firm’s share of the market for general insurance in the UK to 9 per cent

Allianz will employ some 8,300 people in the UK once the deals complete. Reuters
Allianz will employ some 8,300 people in the UK once the deals complete. Reuters

Allianz agreed to buy two insurance businesses in the UK in deals valued at a combined $1 billion, transforming the firm into the second-biggest general insurer in the country.

The Munich-headquartered company agreed to acquire the general-insurance business of Legal & General for $305 million, and said it would buy the 51 per cent in LV General Insurance, according to statements from Allianz and L&G.

The two deals will take the German firm’s share of the market for general insurance in the UK to 9 per cent. Allianz chief executive Oliver Baete has been exploring deals to grow and potential targets have included Zurich Insurance, Aviva and RSA Insurance, Bloomberg reported last year.

L&G expects to complete the sale of its unit to Allianz in the second half, pending regulatory approval, it said in a statement on Friday. The LV transaction will likely complete at the end of the year, Allianz said in a separate statement.

L&G said the disposal would allow it to concentrate on its core businesses of asset management and life insurance. The firm, which is the UK’s biggest money manager, failed to make a profit from its general-insurance unit last year as a combination of flooding and a heat wave led to increased claims from people with home and contents policies.

“Last year we had the lot in terms of weather,” L&G’s corporate affairs director John Godfrey said in a telephone interview. “Heat waves are very bad for this business because you get subsidence as the ground dries up.”

The unit generated an average profit of $34m over the last three years. L&G may get further payments from Allianz over the next three years depending on the performance of the professional-indemnity book that the German insurer will run as part of the deal.

The head of Allianz’s UK business, Jon Dye, declined to say on a call with journalists on Friday how much money the company expects to save by combining L&G’s general-insurance division with its soon-to-be wholly owned LV division. Allianz will employ some 8,300 people in the UK once the deals complete, he said, without saying whether any jobs will be cut afterwards.

Updated: May 31, 2019 05:59 PM

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