Allianz and Yapi Kredi have reached an agreement to enter into a 15-year exclusive distribution agreement and for Allianz to acquire Yapi Kredi Sigorta, the property and casualty insurer, including its subsidiary Yapi Kredi Emeklilik, the life and pension business.
Yapi Kredi Sigorta is the 5th largest property and casualty insurance company in Turkey with total premiums of E531m. Yapi Kredi Emeklilik holds a top-4 position in life insurance with premiums of E90m, with a pensions business ranked 3rd with assets under management of E1.5bn. The combination of Allianz Turkey with the Yapi Kredi insurance operations will create the number 1 non-life insurer, the number 2 pensions provider and the number 3 life insurer in Turkey, a strategically important market for Allianz where the group has a 90-year history.
Under the terms of the agreed transaction, Allianz will acquire Yapi Kredi’s 93.9% shareholding in Yapi Kredi Sigorta for a total net consideration to Yapi Kredi of E684m. The remaining 6.1 percent of Yapi Kredi Sigorta is listed on the Istanbul Stock Exchange and will be subject to a mandatory tender offer by Allianz shortly after closing. Yapi Kredi will retain a 20% stake in Yapi Kredi Emeklilik, the life and pension business which is a subsidiary of Yapi Kredi Sigorta, to support the long-term strategic partnership with Allianz.
An important part of the agreement between Allianz and Yapi Kredi is a 15-year bancassurance agreement, which will provide Allianz exclusive access to the 5th largest banking network in Turkey with 928 branches and 6.5 million customers.
“Turkey is one of the fastest growing insurance markets worldwide, supported by a robust economic outlook and a large, young population of 75 million people,” said Oliver Bäte, member of the board of management of Allianz SE.
“The transaction with Yapi Kredi is a unique opportunity to move into a market-leading position in one of Europe’s key growth markets which is also an important bridge between Europe and Middle East/Central Asia. This transaction fits perfectly into Allianz’s strategy to use bolt-on acquisitions to strengthen its position in growth markets.”
Yapi Kredi CEO Faik Açikalin stated that the Turkish insurance sector has become one of the most prominent markets in the world in recent years also thanks to Turkey’s sound macroeconomic fundamentals. “During the sales process, both Yapi Kredi Sigorta, which enjoys a pioneering position in the insurance sector with its performance, and Yapi Kredi Emeklilik, which has a significant place in the lives of its customers with the added value it creates, received considerable interest from several strong international institutions. We are pleased with having reached an agreement with Allianz at the end of this process. The agreement also includes the continued distribution of insurance and pension fund products to customers through our bank’s extensive service network. Thus, we have chosen a business partner with whom we can both walk together, consolidate strategic cooperation, and jointly create added value for our customers in the sector.”
The Turkish market offers significant growth potential for insurance due to low penetration, with premiums at just 1.3% of GDP in Turkey compared to 7.9% for Western Europe and 2.6% for Central and Eastern Europe. In the last five years (2007-12) annual premium growth has averaged 12.5% in P&C, 14.2% in life insurance and 35.1% in pensions. In recent years, bank distribution has become the dominant channel for life and pension products with banks representing 77% of life premiums in 2012 in Turkey.
The transaction is expected to close during the second half of 2013 and is subject to regulatory and competition board approvals.
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