The German insurer Talanx has acquired the property/casualty insurer ERGO Sigorta A.S. from a Munich Re subsidiary.
Financial details of the transaction where not disclosed. Talanx purchased ERGO Sigorta from ERGO International, which is a unit of ERGO, the primary insurance unit of Munich Re.
Talanx said the deal is in line with its business strategy for its five core retail international markets in that it moves the company “closer to its goal of ranking among the top five insurers in Turkey.” In addition to Turkey, Talanx’s other core retail international markets are Poland, Brazil, Mexico and Chile.
As a result of the acquisition, the premium volume generated by Talanx’s businesses in Turkey will increase by €139 million ($119.4 million) to more than €400 million ($343.7 million) and the market share will rise to more than 5 percent.
The transaction is expected to deliver a positive profit contribution by the second year at the latest and hence also has favorable implications for earnings, said Talanx.
The transaction is still subject to approval by the relevant supervisory authorities, which is anticipated for the third quarter of 2019.
“This acquisition boosts HDI Sigorta from number 11 among insurers in Turkey to the number seven spot,” commented Sven Fokkema, chief executive officer of HDI International AG and a member of the board of management of Talanx.
“We have thus moved a major step closer to achieving our strategic goal of ranking among the top five insurers in each of our core markets,” he added. “Through economies of scale and by leveraging potential synergies we are aiming to further enhance the operating profit in Turkey.”
The acquisition also substantially improves the diversification of Talanx’s product portfolio, Fokkema said.
In 2018 ERGO Sigorta A.S. reported a gross written premium volume of €139 million ($119.4 million) with a market share of 1.6 percent. The company employs around 320 staff and has a distribution network comprised of 1,500 intermediaries.
Talanx existing subsidiary, HDI Sigorta A.S., has been operating in the Turkish property/casualty insurance market since 2006. The company offers insurance services through roughly 420 employees, nine regional offices and more than 2,000 insurance brokers and agents as well as 10 bank partners.
The gross written premium volume booked by HDI Sigorta in 2018 amounted to €278 million ($238.9 million), equivalent to a market share of roughly 3.5 percent.
With the acquisition of the ERGO subsidiary this market share is now expected to grow to 5.1 percent, Talanx which is the parent company of Hannover Re.
*This story appeared previously in our sister publication Insurance Journal.