UK general insurer Aviva has agreed to enter into a long-term bancassurance partnership with Spanish savings bank Caja de Ahorros de Murcia. The transaction is subject to regulatory approval.
As part of the agreement, Caja de Ahorros de Murcia (Cajamurcia) will provide exclusive access to its network of 413 branches to Cajamurcia Vida y Pensiones (Cajamurcia Vida), a newly established jointly-owned life insurance company, to sell life insurance and pension products, while Aviva will have management control over Cajamurcia Vida. Furthermore, Aviva will consolidate its business at a group level.
The consideration will be E112.5 million in cash. Further consideration may be payable up to a maximum of an additional E275 million, dependent on the performance of the partnership.
The new partnership will significantly strengthen Aviva’s position in Spain, where it has been ranked third in the country’s life market in terms of gross written premiums for the last five years. The group also operates the second largest banking distribution network in Spain.
The Cajamurcia network and customer base will bring Aviva’s total bancassurance network to more than 4,600 branches, providing access to more than 10 million potential customers, thus strengthening its banking network. The bancassurance channel accounted for over 72% of 2006 new business premiums in the Spanish life market.
Cajamurcia has expansion plans to increase its branch network to up to 500 branches over the next three years and this will complement the growth expected from Aviva’s other bancassurance partners.