Eureko, Aviva enter Turkish insurance market
Posted by meb at March 22nd, 2007
Dutch Eureko and Britain’s Aviva secured deals in the potentially lucrative Turkish insurance market on Wednesday by teaming up with the country’s life, non-life and pensions firms.
Turkey’s Garanti Bank said it had agreed to sell 80 percent of its non-life insurance unit Garanti Sigorta to insurer Eureko for 365 million euros ($485 million) and a 15 percent stake in its pension and life company Garanti Emeklilikto the same company for 100 million euros.
Aviva said it had signed a preliminary deal with Turkish insurer Aksigorta and leading lender Akbank to form a life and pensions business and to set up a banc assurance venture in Turkey.
No financial details were immediately available.
Several foreign firms have been looking to buy into Turkey, regarding the European Union-applicant country as underinsured. Non-life premiums account for around 1.4 percent of the overall economy compared to 2.6 percent in Europe.
Shares in Garanti Bank rose 1.79 percent to YTL 5.70, and Aksigorta – part of the huge Sabanci Holding conglomerate – was up 3.28 percent at YTL 6.30, while Akbank was unchanged at YTL 9.15 on a firm Istanbul stock exchange at 0825 GMT.
Aviva, Britain’s largest insurer, gained 0.79 percent to 765 pence in early trade.
Attractive market:
Aviva, which currently has a 9.5 percent share of the Turkish life market, said the proposed deal would merge its Turkish life and pensions business with Aksigorta’s own Ak Emeklilik into a new company that the two firms would jointly own and manage.
The new firm, which would become Turkey’s number two life insurance company and its top pensions firm, would have a long-term and exclusive deal to sell life insurance and pensions through Akbank’s branches to its 5.9 million retail customers.
“Aviva is committed to developing its business in Turkey and this merger will bring attractive growth opportunities,” Tidjane Thiam, head of Aviva’s European operations, said.
Aviva said the three parties were in exclusive talks and planned to sign a definitive deal later this year.
Turkey, with a fast growing population of 74 million and increasing wealth, is attracting foreign investors with strong economic growth.
But insurance premiums, having far outstripped overall growth of around five percent last year and inflation of 10 percent, grew 20 percent to YTL 9.4 billion, according to data from industry association TSRSB.
Foreigners already here include France’s Groupama and AXA. As more enter, the number of players – 53 at the end of 2004 – is expected to shrink.
Reforms to the social security system including healthcare are expected to help the industry, as is a new law allowing mortgages, which should lead to associated insurance products.
As life insurance accounts for just 15 percent of all premiums, or YTL 1.4 billion last year, the sector is not yet very profitable and insurers are moving into Turkey as a long-term bet.
source:
By Paul de Bendern and Clara Ferreira-Masques
ISTANBUL/LONDON – Reuters
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