Report Rx for European Insurers Financial Health – $18 Billion Asset Sale

December 11, 2002

Many European insurers, including the two largest companies, Germany’s Allianz and France’s AXA, may be hanging “For Sale” signs on some of their operations in order to restore their battered finances. The total amount of properties on offer could top 18 billion Euros (the Euro and the dollar are currently of roughly equal value).

A report from Reuters News Agency cited findings by analysts at the investment bank Fox-Pitt Kelton (FPK) which indicated that, although divisions worth $5.5 billion Euros were currently being offered, including Royal & Sun Alliance’s sell off of certain U.S. and Asian units and Fortis exit from its French life business, another $12.4 Euros worth of properties could be up for sale soon.

The report specifically mentioned AXA’s Australian and Canadian P/C operations and parts of its holdings in the Netherlands, Italy and Germany as being potential sale candidates. It also indicated that Allianz might by looking for a buyer for Fireman’s Fund, as well as some of its global risk operations and banking units. Neither company has commented on the report.

The problem, according to FPK, is that no one seems to have the kind of money available to buy the properties. Practically all European insurers and financial service providers are suffering from the same problem – the need to increase reserves in the face of declining equity values – leaving them strapped for cash.

FPK said that only Aegon, Generali and, paradoxically, AXA, had the financial strength to make serious offers, but they’re unlikely to do so while share values remain depressed. Nor is help likely to come from the U.S., even though many U.S. companies are in better shape financially, they face challenges in the U.S., that make it unlikely anyone will go on a shopping spree in Europe.

Was this article valuable?

Here are more articles you may enjoy.