
Banco Bilbao Vizcaya Argentaria SA and Allianz SE announced on April 27, 2020, that they had reached an agreement to implement a strategic bancassurance partnership. The transaction encompasses the creation of an insurance joint-venture (JV) between Allianz and the Insurance arm of the Group, BBVA Seguros, with a 15-year agreement to distribute non-life insurance products manufactured by Allianz on an exclusive basis in Spain.
Allianz is set to acquire 50% plus one share of the joint venture for EUR 277 million. In addition, Allianz has announced it could pay a further EUR 100 million which would depend on achieving certain business and operational targets. The agreement excludes BBVA Seguros’ health insurance business and will be subject to regulatory approvals, as applicable.
DBRS Morningstar views this deal as positive for BBVA, as it is expected to generate a net profit of around EUR 300 million as well as 7 basis points (bps) on its fully-loaded CET1 capital ratio, based on the EUR 277 million acquisition price. We consider this positive impact from the transaction could help mitigate in the short-term the expected negative impact that the COVID-19 crisis will have on the Bank’s profitability. In addition, BBVA will benefit over the medium-term from expanded cross-selling opportunities of more innovative insurance products and the expertise of Allianz, one of the largest insurance companies in the world.
DBRS Morningstar also sees the transaction as an opportunity for Allianz to renew the distribution of non-life insurance products in Spain, where the Insurer had a joint-venture with Banco Popular SA before its failure and subsequent sale to Banco Santander SA in 2017. BBVA benefits from an extensive insurance network in Spain active in all segments, including life and non-life.
In addition, Allianz would leverage off BBVA’s strong footprint in Spain with around 11 million clients and an already well-established position in bancassurance through its 2,600 branch network. The joint-venture with BBVA will allow Allianz to consolidate its position as the third largest player in the non-life insurance segment in Spain by increasing its market share to approximately 7.5%. Moreover, this transaction could open the door for Allianz to additional bancassurance distribution deals in Latin America where BBVA is still actively looking for a partner.
The bancassurance channel has become an important conduit for the distribution of insurance products in Europe, particularly in life insurance where bancassurance accounts for well over 60% of total sales in France, Italy, Spain and Portugal. The bancassurance channel plays a dominant role in the Spanish life insurance market, with a significant number of Spanish banks having created either wholly-owned insurance subsidiaries or established joint-venture agreements with traditional insurance companies. Spanish banks have also started to pursue the non-life insurance segment more aggressively in recent years to diversify their revenue streams by leveraging their large distribution networks.
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