DNB and SpareBank 1 Gruppen have signed an agreement to merge their respective insurance operations to create an enlarged Norwegian insurance company, valued at NOK19.75bn ($2.43bn).

DNB, SpareBank 1-insurance-merger

Image: DNB, SpareBank 1 Gruppen sign $2.4bn insurance merger to create a new Norwegian insurance company. Photo: courtesy of SpareBank 1.

The new Norwegian insurance company will be formed from the combination of DNB Forsikring and SpareBank 1 Skadeforsikring.

According to DNB, the merged company will have a product portfolio within non-life insurance, and will cater to the personal and SME markets.

SpareBank 1 Gruppen CEO Turid Grotmoll said: “With the new company, we will gain more power to further develop innovative and customer-friendly solutions, and get even faster on the track with new products to customers. We now create tomorrow’s insurance company and have great aspirations.”

The parties signed a letter of intent on the insurance merger in June 2018.

Under the merger terms, the individual personal risk insurances of both DNB Livsforsikring and SpareBank 1 Forsikring, and also the company-paid personal risk insurances from SpareBank 1 Forsikring, will be transferred to the new Norwegian insurance company.

DNB CEO Rune Bjerke said: “We are very pleased to be part of a large and competitive insurance company. For consumers, increased competition is good. The new company will be able to offer our customers even more and better insurance products.

“We are impressed with what SpareBank 1 has achieved with its commitment to insurance. Now we combine two very good insurance environments, and we look forward to working together to make the best customer experiences in the insurance market.”

DNB, which is a financial services provider in Norway, will own a stake of 35% in the new Norwegian insurance company with an option to increase it to 40%. On the other hand SpareBank 1 Gruppen, which is a group of Norwegian savings bank, will hold the remaining 65% stake in the enlarged insurance company.

The merger deal assumes an exchange ratio of around 80% for SpareBank 1 Gruppen and about 20% for DNB. The exchange ratio has been settled on a negotiated market value of the two non-life insurance companies, including the value of the transferred personal risk products.

Subject to approval from relevant authorities, the merger to create the Norwegian insurance company is expected to be completed on 1 January 2019.