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Significant events 27 Apr 2020

BBVA reaches an agreement with Allianz to boost its non-life insurance business in Spain

BBVA and Allianz have reached an agreement to create a bancassurance partnership, aimed at jointly boosting the non-life insurance business in Spain. The partnership brings together two strong and innovative global leaders with common strategic priorities. It also combines the expertise of industry partner Allianz, a leader in innovation and product development in bancassurance, with BBVA’s client knowledge and network distribution, offering customers products and solutions to improve their financial health and that of their businesses. The agreement, which is subject to the approval of regulatory authorities, is expected to generate a net profit of c. €300 million and c. 7 basis points on BBVA Group fully-loaded CET1 capital ratio, according to the initial price set at c. €277 million. Additionally, Allianz could pay up to €100 million more, depending on a series of goals.

Allianz and BBVA will combine know-how in underwriting, data and business analytics to digitally embed insurance into banking customer journeys and build together a new and innovative bancassurance platform. Its customers will now have easy access to Allianz’ insurance solutions through BBVA’s extensive branch network (c.2,600 branches in Spain) and leading digital platforms. With non-life premium income of €2.4 billion in 2019, Allianz Seguros is ranked among the top three property-casualty insurers in Spain.

“Partnering with a top insurer like Allianz will bring a wider and more innovative insurance offering to BBVA clients in Spain,” BBVA chairman Carlos Torres Vila said

The agreement with Allianz, which has been reached following a strategic review process, involves the bank’s non-life insurance business in Spain, excluding the health segment.

“We are confident that the strategic alliance with Allianz announced today will strengthen BBVA’s strategy and it is fully aligned with our priority of improving clients’ financial health. Partnering with a top insurer like Allianz will bring a wider and more innovative insurance offering to BBVA clients in Spain,” BBVA chairman Carlos Torres Vila said.

“Our strategic focus is very similar and our collaboration in building one of the biggest bancassurance partnerships in property-casualty insurance, including a focus on digital solutions will lead to mutual success,” said Oliver Bäte, Chief Executive Officer of Allianz SE. “This partnership will enhance BBVA’s offering by delivering a full range of attractive non-life insurance products to customers, leveraging on its leading position in the country, as well as on Allianz’ recognized brand and capabilities. We continue to innovate and join forces in co-creating world-class digital products for our customers, and we are pleased that BBVA has chosen Allianz as the best solution provider for its customers.”

The agreement considers the creation of an insurance business joint venture (JV), to which BBVA Seguros will be adding assets and liabilities related to the non-life insurance business. The in-force business that will be transferred to the new JV includes ca. 300  million of gross premiums written as of 2019. BBVA Seguros will sell a 50 percent plus one share of the new JV to Allianz, for an initial fixed price of approximately €277 million, which will be adjusted according to the variation of the JV’s shareholders equity between signing and closing date. In addition to the fixed price, Allianz will pay a variable price up to €100 million, related to achieving specific business goals and attaining some milestones expected in the integration plan agreed by both parties. The agreement provides that BBVA will distribute, on an exclusive basis, the JV’s insurance products during a 15-year period.

Excluding the variable part of the price and once the closing is complete, this transaction will generate a net profit of c. €300 million and a positive impact of c. 7 basis points on BBVA Group fully-loaded CET1 capital ratio. The closing of the deal is subject to obtaining the pertinent regulatory authorizations.

“BBVA holds a key head start in the non-life insurance business given the knowledge of its customers and clients and distribution capabilities through physical and digital channels. Allianz boasts a clear international leadership in innovation and development of insurance products,” said Peio Belausteguigoitia, head of BBVA Spain.

“We are very pleased to enter into a long-term bancassurance relationship with BBVA in Spain,” said Iván de la Sota, Chief Transformation Officer of Allianz SE. “This partnership strengthens our position in the market and demonstrates our strong commitment to continue growing in Spain, even more during these difficult times. Together with BBVA, we aim to develop new innovative insurance solutions that are simple and attractive for the customers”.

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