German insurance and reinsurance group Munich Re has sold three of its ERGO Group operated legal insurance subsidiaries to Allianz Group.
ERGO Group AG has sold its legal protection insurance subsidiary DAS Switzerland and the assets of DAS Luxembourg and Slovakia to Allianz, as it seeks to rationalise its primary insurance businesses.
The three ERGO legal insurance subsidiaries generated premium income of €38.3 million in 2016, so are a small piece of the overall Munich Re re/insurance group.
But the company sees the continuing rationalisation of the ERGO portfolio of companies as an important strategic move.
“As part of our internationalisation strategy, we are constantly reviewing and analysing our business operations. We see ourselves as pacemakers, not as followers,” explained Alexander Ankel, Chief Operating Officer of ERGO International AG. “We are never satisfied with simply being present: our vision is to be an innovation driver in our industry – in every market and region we operate in.”
ERGO said that it is “continuously reassessing its international business activities in terms of their strategic relevance, position and market appeal” adding that it “may consider selling companies that fail to meet the minimum requirements now or in the foreseeable future.”
DAS Switzerland, which has been acquired by Allianz Suisse, is the largest component of the transaction accounting for premium income of around €30 million. It is ranked seventh on the Swiss market with a market share of 6.2%.
“Our aim with this merger is to utilize growth opportunities in the non-life business and further strengthen our competitive position. This will enable us to create the best conditions for our customers and place us in an excellent position in this growth market,” said Severin Moser, CEO of Allianz Suisse.
D.A.S. Slovakia is the leading provider of legal insurance in the country, with a market share of 85.1%. Meanwhile D.A.S. Luxembourg holds a market share of 18.2% and ranks in second place in the country.
The D.A.S. Slovakia branch will be absorbed by Allianz’s Slovakia subsidiary while DAS Luxembourg’s legal insurance portfolio will be ceded to the subsidiary of Allianz Benelux in Luxembourg.
Munich Re’s goal for ERGO is to strengthen its position in developed European markets, such as Poland and Greece, build on the firms global specialty insurance business, and to expand its business activities in growth markets such as China and India.