Legal & General Group said Friday that it has agreed to sell its general insurance business to Allianz U.K. for GBP242 million.
The general insurance business is comprised mainly of retail customers with household insurance policies. Gross written premiums were GBP410 million in 2018, L&G said.
Allianz U.K. has also agreed to buy out the remaining 51% stake in LV General Insurance Group, its partnership with Liverpool Victoria Friendly Society, for up to GBP578 million.
The two deals will make Allianz the number two general insurer in the U.K., with a market share of 9% and combined gross written premiums of GBP4.03 billion, the German company said.
"With these two transactions, we are pleased to demonstrate our further commitment to the U.K. market," said Niran Peiris, an Allianz board member.
Allianz's expansion comes at a difficult time for U.K. insurers, who are awaiting the outcome of a key regulatory investigation into claims of unfair pricing for longstanding customers. The potential for pricing restrictions or retrospective punishment has sent jitters through the industry, which is increasingly reliant on offering discounts to lure new customers searching for deals online.
Analysts at Barclays said Allianz had secured attractive valuations for the acquisitions, reflecting difficult market conditions in the U.K.
"We believe investors are inclined to give Allianz's management at least the benefit of the doubt that any M&A activity will create value with Allianz capitalizing on its balance sheet and operating advantages," Barclays said.
Allianz said it will continue to use the Legal & General brand in the U.K. for up to three years but it intends to combine the business with LV General Insurance. The acquisitions are expected to be completed this year.