After rumours swirled earlier this week (see
article),
Allianz and LV= have agreed on a long-term joint venture that will create the UK’s third largest personal insurer with over six million customers and over £1.7 billion annual premium income.
The joint venture will launch under the
LV=brand name and will acquire Allianz’s personal home and motor insurer’s renewal rights, according to a joint statement. Allianz will obtain LV= GI’s commercial insurer’s renewal rights.
LV= will also receive £500 million from Allianz in exchange for a 49% stake in the former’s general insurance businesses. The deal will go through three stages, the first of which is expected to close during the second half of 2017.
The second stage will take place in 2019 and will see Allianz pay £213 million for a further 20.9% stake in LV= general insurance through an agreed, forward purchase based on a total valuation of £1.020 billion for 100% of LV= general insurance. LV= also has the option to sell all or part of its remaining shares to Allianz. Authorities have yet to approve the transaction.
The joint venture will be run by Steve Treloar, LV=’s current managing director of general insurance. He will report to a board of directors drawn from LV= and Allianz. Treloar believes the joint venture will be a leading personal insurer with a diversified distribution base across direct, broker and corporate partner channels.
“The combination of LV=’s strong brand, longstanding reputation in personal insurance and excellent customer service with the financial strength, digital expertise and data analytics of Allianz, the world’s largest P&C insurer, will allow us to further develop and expand the products and services that our customers demand,” he said.
Both firms believe the joint venture will give them potential opportunities to develop broader joint propositions in the UK market, as they combine their expertise in pricing, underwriting and claims.
LV= CEO Richard Rowney said the deal will enable the firm to strengthen its capital position.
“The strategic partnership with Allianz will allow us to continue to benefit from a growing personal insurance business while also enabling us to strengthen our capital position, leaving us well placed to continue to expand our life and pensions business and pursue new digital opportunities,” he said.
