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'Little logic' in Allianz/QBE merger

Allianz Group is in an acquisitive mood, but a tie-up with QBE Insurance Group Ltd. makes little strategic sense and a bid seems unlikely despite rumors in the marketplace, analysts told S&P Global Market Intelligence.

Germany's largest insurer by gross written premiums is reported to have already approached its Australian equivalent, though QBE denied this.

Both insurers are very active in the commercial lines business, meaning there is "some overlap" from which to extract synergies, but beyond that, there is little logic in a merger from Allianz's perspective, Helvea equity research analyst Daniel Bischof said in an interview.

Allianz has confirmed it is focused especially on growing in the nonlife business — a fact that could make the nonlife-focused QBE an attractive target. But with a current valuation of almost A$17 billion, QBE would be a pricey acquisition even for cash-rich Allianz, Bischof said.

The German group's CEO, Oliver Bäte, stressed that it had never launched a hostile takeover, Reuters reported Jan. 15, ruling out one potential acquisition route. And although Bischof said a deal "cannot be excluded," he considers a bid from Allianz unlikely.

A second insurance analyst, who asked not to be named, told S&P Global Market Intelligence that QBE "has struggled a bit" with a low valuation as compared to the underlying strength of the business, potentially making a deal more attractive for Allianz. But the limited potential synergies outside of the commercial lines businesses, combined with the fact that Allianz has said it is looking at deals in Europe and the U.S. first, makes it unlikely that the deal will happen, he said. Rather than buying QBE, Allianz would be much better off snapping up parts of Generali, he added.

Allianz is rumored to be on the lookout for Generali assets that might go on sale if the latter merges with Intesa Sanpaolo SpA, which has confirmed that it is mulling an offer for the Italian insurer. In particular, Allianz has been linked with a potential bid for Generali's assets in France.

Intesa Sanpaolo, which mainly operates in Italy, is rumored to be eyeing the Italian part of the business only, leaving open the possibility of a large sale of Generali assets in France, Germany and central and eastern Europe.

Morgan Stanley is advising Allianz on potential acquisitions, while Goldman Sachs is advising QBE, Reuters said Jan. 30, citing unnamed sources.

As of Jan. 30, US$1 was equivalent to A$1.32.