German global insurer Allianz's proposed acquisition of a majority stake in leading Singapore insurer, Income Insurance, would clearly strengthen Allianz's business profile in Asia, a strategic area of growth for the group, says Mr Manuel Arrive, a director of insurance at Fitch Ratings.
The acquisition would make Allianz the fourth largest composite insurer in Asia (from 9th) and a leading player in Singapore (#1 in P&C).
Mr Arrive also says that the proposed acquisition is fully in line with Allianz’s strategic objectives to grow inorganically in P&C rather than L&H and to achieve market-leading positions in regions in which they are already active.
He said, “At group level, the size of the transaction is small and Allianz’s AA IFS rating is unaffected. Specifically, it is neutral to the group’s capitalization, company profile, and financial performance, all of which are already very strong and key rating strengths.
Fitch affirmed Allianz SE’s IFS rating at ‘AA’ on 7 June 2024 with the outlook ‘Stable’.
On 17 July 2024, Allianz – through its wholly owned subsidiary Allianz Europe – announced a pre-conditional voluntary cash general offer to acquire at least 51% of the shares in Income Insurance for S$2.2bn ($1.64bn), subject to regulatory approval.
Mr Kanishka de Silva, senior director, Insurance, at Fitch Ratings, said, “We expect Income Insurance to benefit from Allianz’s global expertise and potential synergies between the two insurers. The acquisition will strengthen the Allianz/Income Insurance combined market position in Singapore. It will further strengthen Income Insurance’s #1 position in the fragmented non-life space, while we expect the life space, in which Income Insurance ranks #6, to continue to be dominated by the existing players.”
He added, “Singapore’s insurance operating environment is favourable with stable macro fundamentals, sound regulation, and favourable demographics.
“Southeast Asia continues to show faster growth compared to some of the more mature markets in the region and we expect it to continue attracting global insurers.”
For instance, Japan’s Sumitomo Life Insurance completed the acquisition of Singapore Life Holdings (SLH), the holding company of Singapore Life on 18 March 2024.