ING to Acquire Most of Allianz Canada, S&P Puts Insurer on CreditWatch

The Netherlands’ ING Group and Germany’s Allianz announced that they have concluded a definitive share purchase agreement for the acquisition of Allianz’ property and casualty (P&C) insurance operations in Canada, except for its Canadian industrial lines business, which is part of Allianz Global Risks (AGR).

Further details, including the financial terms, of the acquisition were not disclosed.

“Under the terms of the agreement, ING will acquire Allianz of Canada Inc. and its subsidiaries Allianz Insurance Company of Canada, group insurer Trafalgar Insurance Company of Canada as well as Canada Brokerlink, a network of insurance brokerages operating in Ontario and Alberta,” said the bulletin published on the Allianz Web site. The transactions are subject to regulatory approvals.

ING said that as a result of the acquisition, its gross written premiums in Canada will increase by approximately CDN$ 600 million (U.S.$480 million) to reach more than CDN$ 4 billion (U.S.$3.2 billion). “ING will also expand its network of independent distribution partners. More than 800 employees from Allianz Canada will transfer to ING, which currently has a workforce of more than 5,600 employees across the country,” said the announcement. “Also involved in the transaction are Canada Brokerlink’s 525 employees.”

ING will be acquiring mainly Allianz portfolio of personal and small to medium commercial lines business, which it said would reinforce its position in the company’s preferred market sectors. “The acquisition allows us to continue expanding our activities within the P&C insurance industry, especially in Ontario and Alberta”, stated Claude Dussault, President and CEO of ING Canada. “As we increase the scale of our activities, we will also be in a better position, in collaboration with our distribution partners, to improve our offering of innovative solutions to consumers.”

“With its solid performance, ING Canada continues to be the leading provider of P&C insurance in Canada. Its past success and future growth potential were decisive factors in the decision to grow our market share in Canada”, commented Fred Hubbell, Member of the Executive Board of ING Group, responsible for Insurance Americas.

Jan Carendi, Allianz AG board member responsible for the Americas, explained that the transaction “enables Allianz to achieve two objectives: In selling our Canadian personal lines, some of the commercial lines operations and the brokerage business, we stick to our strategy to focus on core business and markets and to reduce complexity. Secondly, retaining the industrial lines operations will allow us to successfully support Canadian and international clients of Allianz Global Risks.”

Standard & Poor’s Ratings Services reacted to the announcement by placing its “BBB+” counterparty credit and financial strength ratings on Allianz Insurance Co. of Canada and its affiliate, Trafalgar Insurance Co. of Canada, on CreditWatch with developing implications.

“Standard & Poor’s placed the ratings on CreditWatch developing because of the general uncertainty related to the unknown financial strength, strategic intentions, and operational intentions of the acquirer as well as the risks if the transaction does not close,” explained S&P credit analyst Michael Gross.

S&P noted that, “based on 2003 net premium writings, Allianz Canada was ranked as one of the top 15 writers of property/casualty insurance in the highly fragmented and competitive Canadian property/casualty marketplace. Leveraging the Allianz AG brand name has provided for additional presence in the market.”

Topics Mergers & Acquisitions Carriers Canada Property Casualty Allianz