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P&C at top of Allianz's shopping list as it considers further M&A

Property and casualty insurance is top of Allianz Group's list as it seeks further acquisitions, but executives stressed the company would not rush into any deals and had yet to find a suitable fit.

Allianz faced several questions from journalists at a Feb. 16 conference for its fourth-quarter 2017 results following speculation that the German insurance group was interested in buying fellow global insurance business XL Group Ltd. The company said it has more than €3 billion earmarked for "external growth" (although XL currently has a market capitalization of just over $11 billion).

While declining to comment on any specific rumors, CFO Giulio Terzariol told journalists that from a strategic perspective "P&C is at the top" with regards to acquisitions. He added: "We are also interested in potential acquisitions in asset management, especially acquisitions to further expand and increase our skills. For life insurance we have a certain appetite as well."

Terzariol also said there could be opportunities in the U.S. He said: "It is a large market, a market in which you can still generate growth, and we are also present in the U.S. in asset management, life insurance and P&C. Potentially we could leverage synergies there."

CEO Oliver Bäte also noted that the company was keen to follow up its U.K. joint venture with Liverpool Victoria Friendly Society Ltd., in which Allianz will eventually acquire a 69.9% stake in the U.K. mutual insurer's P&C business, with more deals.

"We would like to continue to invest into P&C as we have done with LV=," he said, while stressing that Allianz would need to find the right company at the right price before doing a further deal.

"We believe that the prices for companies are pretty high," he said. "We will do something if [it is right] for our business and shareholders. So far we haven't found anything that is fitting.

"Many companies are trying to maximize the sale value of their P&C assets. We need to be disciplined and wait for when the strategy and the [economics] will fit."

Bäte held the LV= deal up as an example of how Allianz would pursue future deals. He said the acquisition allowed Allianz to gain a strong foothold in the U.K. direct personal lines business, which it had tried and failed to do on its own.

"I am really glad that we have been able to convince LV= to cooperate with us," he said. "It has taken some time. That is the way we need to work. It is a lot of effort but that is the way it works."

Allianz reported a 22.3% dip in fourth-quarter 2017 profit to €1.43 billion because of one-off hits, including catastrophe losses, U.S. tax changes and a loss on the sale of Oldenburgische Landesbank AG.