Meiji Yasuda and Talanx Team Up to Buy Polish Insurer Europa Group

Japan'sMeiji Yasuda Life Insurance Co. and its German partner Talanx AG have jointly reached an agreement with Polish financial company Getin Holding Group to acquire its life and nonlife subsidiaries known as Europa Group in Poland.

Meiji Yasuda and Talanx launched a tender offer for publicly listed Europa Group on the Warsaw Stock Exchange. TU Europa SA and TU na Zycie Europa SA are Europa Group's life and nonlife units, respectively, with a focus on bancassurance in Poland.

The acquisition of Europa Group is subject to regulatory approvals. Talanx will become the majority shareholder in Europa Group while Meiji Yasuda and Getin Holding will each hold a meaningful stake, said Talanx and Meiji Yasuda in a joint statement. The transaction is expected to be completed in the second quarter of 2012.

"Bancassurance will be the main driver for future growth in Central and Eastern European countries," said Torsten Leue, board member of Talanx. Europa Group sells life and nonlife insurance mainly through bancassurance channels, supported by Getin Holding's financial services networks.

Europa Group's acquisition will be Meiji Yasuda's first joint investment project with Talanx after the two entities formed a capital and business alliance in November 2010. The company is "confident that similar future-oriented joint transactions are to follow," said Hiroaki Tonooka, senior managing executive officer of Meiji Yasuda, in a statement. Europa Group has a strong bancassurance business in Poland, which is one of Meiji Yasuda's target markets in Europe.

The Japanese mutual insurer teamed up with Talanx in 2010 to "exploit joint business opportunities" to pursue sustainable growth in global business. The strategic alliance aims to seek expansion in Central and Eastern Europe. Meiji Yasuda said the strengthening of overseas expansion is part of its strategy of portfolio diversification for long-term growth (Best's News Service, Nov. 8, 2010).

The acquisition in Poland is "the first and important milestone" for the cooperation with Meiji Yasuda, said Leue. Poland is already one of the countries with strongest sales for the Talanx International retail division.

Getin Holding will continue to sell insurance products of Europa Group after completing the acquisition. Leue said Europa Group is "an excellent strategic fit to our current activities in Poland, Russia, Hungary and Turkey." Talanx is Germany's third-largest insurance group with premium income of 22.9 billion euros (US$29.8 billion) in 2010. Talanx owns HDI, HDI-Gerling and Hannover Re and has a presence in 150 countries.

Wroclaw-based Europa Group was the third-largest insurance group in Poland with premium income of 573 million zloty (US$169.7 million) in 2010. The group primarily distributes its products through bancassurance, using external partners such as banks, intermediaries and other financial institutions. Europa Group offers investment products, travel insurance, guarantees and products for small and medium enterprises.

After the transaction, Talanx will become one of the largest insurance groups in Poland. Talanx already owns nonlife and life companies HDI-Gerling Zycie TU SA and HDI Asekuracja TU SA, respectively, in Poland. The nonlife company offers automobile, liability, and property/casualty products.

Japan's leading life insurance groups have pursued mergers and acquisitions in emerging markets in Asia and Eastern Europe in recent years. For instance, Meiji Yasuda entered the China market with the acquisition of a 25% stake in Haier New York Life Insurance Co. Ltd. from New York Life Insurance Co. in January 2011. The Shanghai-based life insurer was renamed Haier Meiji Yasuda Life Insurance Co. Ltd. (Best's News Service, Jan. 11, 2011).

Meiji Yasuda also invested 100 billion rupiah (US$11 million) in Indonesian life insurance company PT Avrist Assurance as part of its overseas expansion plan. The investment was to acquire a 5% stake of Avrist Assurance, which was formerly known as PT Asuransi AIA Indonesia, a life subsidiary of AIA Group. The leading life insurer in Indonesia changed its name to Avrist Assurance in 2009 after AIA withdrew its 60% stake in the joint venture (Best's News Service, Nov. 9, 2010).

Similarly, Japan's largest mutual life insurer, Nippon Life Insurance Co., teamed up with a German insurance group to explore potential business cooperation. Nippon Life invested 500 million euros in 30-year convertible subordinated notes of Allianz SE as part of its overseas strategic investment strategy. The objective of this investment is to establish a long-term partnership that is mutually beneficial for both companies, said Nippon Life (Best's News Service, July 6, 2011).

Meiji Yasuda Life Insurance Co. currently has a Best's Financial Strength Rating of A (Excellent).

(By Iris Lai, Hong Kong bureau manager: Iris.Lai@ambest.com)