Allianz to fully own Portuguese trade credit insurer
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Allianz Trade, the trade credit insurance provider of Allianz, has agreed to buy the remaining stake in Portuguese trade credit insurer Cosec from Portuguese bank Banco BPI as part of the German insurer’s strategy to increase its presence in Southern Europe.
Cosec is a joint venture between Allianz Trade and Banco BPI.
The price of the acquisition is undisclosed. Allianz already owns 50% of Cosec and upon completion of the transaction will hold 100% of the company.
Loeiz Limon Duparcmeur, group chief financial officer and board member of Allianz Trade in charge of finance and investment management, said: “This is a major business opportunity and a new step in our growth strategy which will allow us to strengthen our presence in Southern Europe.”
In addition to this acquisition, Cosec and Banco BPI will renew their partnership with a new distribution deal once the transaction is completed.
Pedro Barreto, member of the board and executive committee of Banco BPI, said: “This agreement will further strengthen the cooperation between Banco BPI and Allianz Trade for the distribution of credit insurance for companies. Our aim is to continue helping companies to trade with confidence, both in Portugal and in the global markets.”
Cosec was founded in 1969. In 2007, Euler Hermes, the predecessor of Allianz Trade, became a shareholder of Cosec, together with Banco BPI, with a 50% stake in the company.
Asked whether the move will lead to job losses at Cosec, an Allianz Trade spokesperson told mallowstreet: “No restructuring plan is envisaged as a result of this transaction, and we do not expect any changes in Cosec’s business model.”
Subject to regulatory approvals, the transaction is expected to be completed in the first half of 2023.
What is the health of the sector?
According to a report by Moody’s Investors last week on European trade credit insurers, firms are strongly capitalised due to Solvency II, given the sector’s average Solvency II ratio was close to 200% in 2021.
While credit insurers have been offering more coverage to their clients since the end of the Covid-19 pandemic, and prices are declining, they have remained highly selective, said the ratings agency. As a result, the quality of their risk exposure is better than before the pandemic.
“The industry has moved away from sectors or customers with high exposure to inflation and supply chain disruption, which began during the pandemic. We therefore estimate that credit insurers' premiums relative to the risks they take on are in fact higher than before the pandemic, and we expect insurers to remain disciplined,” said Moody’s.
However, challenges remain Moody’s said, as trade credit insurers are likely to experience an increase in claims because of a slowdown in economic growth and a consequent rise in credit default rates.
Beyond the deterioration in economic conditions, the agency said their creditworthiness could also be affected in the months ahead by increased reinsurance prices, reduced government ability to support the economy and customers increasingly opting for self-insurance, meaning companies may set aside money to pay for possible losses instead of purchasing insurance.
How do you think the sector will perform in 2023?
