UK-based insurer Aviva and Aksigorta, the insurance arm of Sabanci Holding, have signed an agreement to merge their Turkish life and pensions businesses. The companies have also signed a bancassurance agreement with Turkish private bank Akbank.
Aviva’s Turkish life and pensions business, Aviva Hayat ve Emeklilik (Aviva HE), will merge with Ak Emeklilik (Ak E), Aksigorta’s life and pensions unit. The companies expect the move to create a new leading life and pensions player in Turkey.
In a press release, Aviva said that the merger will bring together Aviva HE’s direct sales force and Ak E’s leading position in bancassurance. The joint venture will be the largest pensions provider in the market, with pensions assets under management of GBP290 million as at March 31, 2007 and a market share of 25%.
Aviva also reported that the joint venture company will be the third largest life insurer in Turkey, with gross written premiums of GBP15.5 million for the three months ended March 31, 2007, representing a market share of 11%.
Aviva and Sabanci said that low insurance penetration rates in Turkey and the potential for continued economic development are expected to create attractive opportunities for profitable growth. Indeed, after five years, total annual pension contributions and life premiums are expected to exceed GBP500 million, with total assets under management of GBP2 billion.
The joint venture will also enter into an exclusive long-term bancassurance agreement with Akbank. The agreement will draw upon Akbank’s strong market position and Aviva’s international bancassurance experience, Aviva said. The agreement will provide life and pension products to Akbank’s 5.9 million retail customers through its 687 branches.
Aviva and Sabanci will jointly manage the venture through equal shareholdings. In addition to contributing its Turkish life and pensions business, Aviva will make a cash payment of $100 million to Aksigorta upon completion of the transaction. The deal is subject to regulatory approval and is expected to be completed in Q4 2007.