M&A News: Allianz Buys L&G GI Book, Plus Remaining LV Stake for £820 Million

The logo of Europe's biggest insurer Allianz SE is seen on the company tower at La Defense business and financial district in Courbevoie near Paris, France, March 2, 2016. REUTERS/Jacky Naegelen/File Photo

Britain’s Legal & General Group will sell its general insurance business to a UK subsidiary of Germany’s Allianz for £242m, reports Reuters.

Legal & General will use the funds to reinvest in its core businesses, it said, and will complete the deal in the second half of 2019. The portfolio being sold comprises mainly retail customers who hold household insurance policies.

In addition Allianz is purchasing the remaining 51 percent of LV, after buying a 49 percent share of LV back in 2017. The deals will give Allianz an estimated 9 percent share of the UK insurance market.

INDUSTRY REACTION

Commenting on reports of Allianz’s  acquisitions of insurance units at L&G and LV, Andrew Holderness, Global Head of the Corporate Insurance Group at Clyde & Co., said:

“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.”

Meanwhile AJ Bell Investment spokesperson Russ Mould told Mail Online;

 ‘While Legal & General’s decision to sell its general insurance business has been in the offing for a while it is still a further reminder of how tough a market this is. Significant competition means there is pressure on premiums, while regulatory changes are also making it more difficult for participants to squeeze as much out of their customers.’

‘However, it will free up capital to invest in the company’s growth priorities. This includes the retirement arm where the company is aiming to benefit from the ageing demographics in developed economies.’

LV insurance faud risks

Insurance Edge Comment:

Some of us in the insurance sector can recall the days of Prudential dominating sectors like home, life and savings bonds, with a huge workforce of agents literally walking the streets, plus branch offices dotted around the UK. Those days seem like a working museum now and the same process of change is going to sweep away some very big names from the current call centre business model that underpins so much motor, life, home, travel and small business cover.

The companies that survive will do so by merging succesful insurtech ideas, and the innovative people who come up with those ideas, within their staid corporate structures. By giving true entrepreneurs some degree of autonomy inside their creaking supertanker structures, some big name insurers can continue to dominate various sectors.

The bottom line is that insurance is a product you need, but do not need to see, or touch, before buying. Those who make online marketing, point of inception, and claims, a truly agile, painless process, will win. Others will waste millions trying to play catch up.

Fasten your seatbelts!

About InsuranceEdgeEditor (1730 Articles)
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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