On Friday, Allianz announced that it will acquire the Greek insurer European Reliance at EUR 7.8 per share, which translates into P/B ratio of 1.4x. Yesterday, the trading day after announcement, European Reliance closed trading at the same price.
On Friday, Allianz announced it has agreed to acquire the Greek insurer European Reliance to create the 5th largest insurer in Greece by GWPs. European Reliance General Insurance is a Greek insurance company with EUR 223m in GWPs, a network of 110 retail offices and 5,667 agents. Price for the total share capital amounts to EUR 207m, which is pricing based on a EUR 7.8 per share bid, and represents a 15.7% premium over Friday’s closing price. Allianz also said that it will enter into share purchase agreements covering 72% of European Reliance’s shares, and that it will launch a takeover bid for the remaining stake. In order to acquire the remaining stake, Allianz will have to pay EUR 58m (out of the total of EUR 207m). At the EUR 7.8 per share bid, the P/B ratio of the European Reliance is 1.4x. One day before the announcement, the stock was trading at EUR 6.02, amounting to a P/B of 1.04x.
As a part of the transaction, European Reliance will be combined with Allianz Hellas, the company’s Greek unit. The merged entity will be led by European Reliance’s CEO Christos Georgakopoulos. Following this, Allianz will become 1st (by market share) in Property-Casualty insurance, 5th based on total GWPs and 5th largest Life/Health insurer in Greece.
Following the approval by the Bank of Greece, the Hellenic Competition Commission and the Hellenic Capital Market Commission, Allianz intends to publish the approved Information Circular and proceed with the Voluntary Tender Offer for the shares in European Reliance at the same price. The shareholders can then tender their shares within the VTO acceptance period.
This marks further expansion of one of the largest insurance companies, which operates in the region. To see how they compare to regional insurance companies, we decided to compare them to Sava Re and Triglav, based on P/E and P/B multiples.
P/E and P/B comparison
As can be seen from the chart, Allianz has both the highest P/E and P/B ratios out of these companies at 10.42x and 1.11x. Compared to them, both Sava Re and Triglav are trading at P/E ratios of 6.7x and 9.1x, respectively. Considering the solid performance both companies had during 2021, (and according to the latest report and expectations, they not only achieved the planned earnings for 2021 but exceeded them as well), this shows that both of these companies have room to grow in terms of the share price. At the same time, Sava Re and Triglav are traded at P/B ratios of 0.9x and 1x, respectively. Considering that a P/B ratio of under 1 is considered a solid investment, the takeover P/B multiple shows how attractive is this insurance market and that Allianz is expecting strong synergies of growing market share.
