Oyak leaves insurance to French partner
Posted by meb at February 7th, 2008
Oyak Holding, a cement-to-autos conglomerate, which also is the army pension fund, signed a deal with its French partner Axa Group to sell its stake in Turkish insurer Axa Oyak Holding.
Axa, Europe’s second-biggest insurer, agreed to buy 50 percent of Axa Oyak Holding it does not own for $525 million to reinforce its position in the country, reported Bloomberg yesterday.
Axa and Oyak, which teamed up in 1999, agreed to drop the Oyak name after the purchase, Axa said in an e-mailed statement. Axa will pay cash and own 100 percent of the venture once the purchase is completed in the first half of 2008, the company said.
Axa Oyak, which focuses on motor and property coverage, has a 10 percent share of the fast-growing Turkish insurance market. The company’s revenues rose 20 percent to 342 million euros in the first half of 2007. “This agreement is an opportunity for the Axa group to strengthen its presence in Turkey and is in line with its strategy of reinforcing its exposure to emerging insurance markets,” the company said.
Ranking second:
Axa Oyak Holding controls 71 percent of Axa Oyak Insurance and 100 percent of Axa Oyak Life Insurance. Axa Oyak Insurance ranks second in premium production after Anadolu Insurance, Turkey’s first national insurance company, daily Hürriyet reported yesterday.
Axa Oyak Insurance’s premium production totaled YTL 823.5 million as of September 2007, according to the figures of the Association of the Insurance and Reinsurance Companies of Turkey (TSRŞB). The premium production Axa Oyak Life Insurance was YTL 109 million as of September 2007.
Axa Oyak Insurance’s market share stands at 11.8 percent in Turkish non-life insurance sector, with revenues of 507 million euros in 2006, Axa said in its announcement. Between 2002 and 2006, the company achieved 35 percent annual growth. Axa Oyak Life Insurance is the eight largest company in Turkish life insurance market, with a market share of 5.5 percent and revenues of 70 million euros in 2006. From 2002 to 2006, the company achieved 16 percent growth annually.
Abundance of liquidity:
French insurance giant Axa entered the Turkish market in November 1994 and became Oyak Insurance’s partner with an 11 percent share. The group’s life insurance company was founded in March 1995, while Axa Oyak Holding was founded in February 1999.
The shares of Oyak Insurance, Nordstern İmtaş Insurance, Axa Oyak Life Insurance and Nordstern İmtaş Life Insurance were transferred to Axa Oyak Holding. In August 1999, Oyak Insurance took Nordstern İmtaş under its roof, and Axa Oyak Life Insurance was combined with Nordstern İmtaş Life Insurance. Axa Oyak Insurance took İnan Insurance under its roof in January 2002.
Oyak Holding was often criticized for its partnership with French Axa. The criticism increased as Axa accepted to pay $17 million to diaspora Armenians as “genocide severance pay.”
Following Oyakbank’s sale to the Dutch ING for $2.67 billion last year, getting out of the insurance business will provide another hefty resource to the group. Oyak Holding will have earned a total of $3.19 billion from the sale of its banking and insurance companies.
According to the announcement by Oyak, Axa Oyak Holding will also purchase 1.5 percent stake of Axa Oyak Insurance, currently owned by motor vehicles company MAİS, for $15 million. The sale, which is subject to approval of public authorities, is expected to close by early spring.
Source: Turkish Daily News
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