Allianz lines up Groupama unit bid

Mar 09, 2012 by Adrian Hönig in  Baden-Baden Meeting

Allianz, the world’s largest insurer, is preparing an offer for French insurer Gan Eurocourtage. Mutual insurer Groupama is having to dispose of its subsidiary to cope with burdens arising from the financial crisis. According to insurance sources, Allianz will have to part with a high three-digit million sum.

Gan Eurocourtage is particularly strong in industrial and commercial lines. The company sells via insurance brokers and its own sales organisation.

Australia’s QBE Insurance was also interested, but is no longer in the running. Two other names – Covéa, which like Gan Eurocourtage is heavily involved in commercial business, and British insurer Aviva – had been mentioned in Paris as possible purchasers, but according to insiders their interest has also melted away, leaving Allianz the only serious bidder.

French insurers said Allianz board members and their opposite numbers at Gan Eurocourtage and Groupama met recently in the Paris office of Morgan Stanley. Here, Allianz received key documentation, including the balance sheet for 2011, which so far is unpublished. But Groupama has not yet opened the data room and made available all relevant documents for Allianz to carry out due diligence, the sources added.

The Munich-based group is keeping silent about its plans. Company sources have confirmed Allianz has expressed its interest, but pointed out there could also be a politically desirable “French solution” with a bidder that has so far not appeared on the scene.

Groupama is under pressure to sell quickly, because the company has to cope with high losses from the financial crisis and the French regulator is pushing for it to strengthen its capital.

Allianz has in recent times been keeping a low profile regarding takeovers, saying it has to wait and see what effect Solvency II will have. However, on February 23, Allianz’s group chief executive, Michael Diekmann, announced a change of direction.

The uncertainties arising from Solvency II are being sorted out bit by bit. “At the same time, new opportunities are arising as a follow-up to the changes in business models by the banks, or on the basis of crisis-linked weaknesses in local competitors,” Diekmann said. “We will consider these opportunities very carefully.”

Previously, Diekmann had said on several occasions he was on the lookout in particular for property/casualty (p/c) acquisitions, not life companies, which had for several years been in the focus of his purchases. The reason for this is insuring vehicles, buildings and companies could quickly generate profits and income Allianz could use to finance its long-term growth in old-age provisions.

These criteria would be met by the planned takeover in Paris. Groupama apparently wants to put only the p/c business of Gan Eurocourtage on the market, which reported premium income of €820m ($1.08bn) in 2010. Life insurance will not be affected.

Allianz has been present in France since 1997 through Assurances Générales de France, which was renamed Allianz France in 2009.

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