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Ageas Buys 31% of Aksigorta in Turkey Insurance Pact

Feb. 18 (Bloomberg) -- Ageas, the insurer formerly known as Fortis, agreed to buy 31 percent of Aksigorta AS, the latest Turkish non-life insurer to attract a foreign partner in a market expanding at an annual rate of 14 percent.

Ageas, based in Brussels and the Dutch city of Utrecht, agreed to buy half of Haci Omer Sabanci Holding AS’s controlling stake in Turkey’s fourth-largest property and casualty insurer for $220 million, the companies said in separate statements today. Ageas said it’s paying a 53 percent premium to Aksigorta’s Feb. 17 closing price in Istanbul.

Premiums in Turkey’s non-life insurance industry account for about 1 percent of gross domestic product, less than one-third of European Union averages, and production has increased at an annual rate of 14 percent in the five years through 2009, Aksigorta said in a presentation on its website. The industry is increasingly dominated by foreign insurers, including Axa SA, Allianz SE, Groupama SA, Eureko BV, Mapfre SA and Aviva Plc.

“You should take into account that Turkey is a growth market when judging the price Ageas is paying,” said Dirk Peeters, an analyst at KBC Securities NV in Brussels who has a “buy” rating on the stock. “Aksigorta has a decent market share as well as a strong distribution partner with Akbank.”

Ageas fell 3 percent, the most in five weeks, to 2.424 euros at the 5:35 p.m. close of trading on Euronext Brussels, paring the stock’s advance this year to 42 percent. That’s the best performance of the 33 companies included in the Stoxx Insurance 600 Index, which has gained 18 percent.

Market Share

Aksigorta reported on Feb. 1 it had gross written premiums of 886.3 million liras ($559 million) last year, a 4.2 percent increase from a year earlier. That gives the Istanbul-based insurer a market share of about 7.4 percent, according to data from the Association of Insurance and Reinsurance Companies of Turkey.

Axa Sigorta AS is Turkey’s biggest non-life insurer with a market share of 12.7 percent, according to the industry group. Axa is followed by Anadolu Anonim Turk Sigorta Sirketi, with 11.9 percent, and Allianz Sigorta AS, which has 8.3 percent.

Ageas and Sabanci will have equal control in Aksigorta’s management. No offer will be made to buy the remaining 38 percent stake in the company from investors, according to the statement. Aksigorta fell 5 kurus, or 2.1 percent, to 2.33 liras in Istanbul trading.

Relative Value

As part of the deal, Aksigorta will get 15 years of exclusivity to distribute its non-life policies through Sabanci’s Akbank TAS, an agreement that’s renewable for periods of five years. Sales of policies through Akbank’s 913 branches generated 13 percent of Aksigorta’s premium income last year.

Sabanci will get about 3.05 times book value for half of its 62 percent stake, based on Aksigorta’s shareholders’ equity as of Sept. 30. Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest bank, agreed in November to pay Dogus Holding AS 3.09 times book value for a 6.3 percent stake in Turkiye Garanti Bankasi AS, according to data compiled by Bloomberg.

Ageas is financing the acquisition through surplus capital, Kathleen Steel, a spokeswoman for Ageas in Brussels, said by telephone. The insurer said Nov. 10 it had about 700 million euros ($950 million) available for acquisitions at the end of the third quarter.

The purchase is the third by Ageas since emerging from the breakup of Fortis in May 2009. Together with BNP Paribas SA, it bought 50 percent plus one share of Unione di Banche Italiane SCPA’s property and casualty insurance business for 120 million euros in September 2009. Ageas also agreed to buy Kwik-Fit Insurance Services Ltd., an insurance broker in the U.K., for about 185 million pounds ($300 million), net of cash acquired, last July.

The sale of the shares by Sabanci is subject to Turkish regulatory approval. Citigroup Inc. and Turkish broker Ak Yatirim were hired as advisers for the sale of the Aksigorta stake in March last year.

To contact the reporters on this story: Aydan Eksin in Istanbul at aeksin@bloomberg.net; John Martens in Brussels at jmartens1@bloomberg.net

To contact the editors responsible for this story: Shaji Mathew at shajimathew@bloomberg.net; Angela Cullen at acullen8@bloomberg.net

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