Zurich close to finalize Turkish Yapi Kredi Sigorta deal, report says

The sale of Yapi Kredi Sigorta, which has a market value of $1.042 billion (700 million euros) according to the Thursday's closure price, was launched in May.Â

 

Yapi Kredi Bank, who owns the majority of the insurance company, had hired Merrill Lynch and Unicredit CAIB as advisors to help it reorganize its operations in the insurance sector.

 

Vatan said Italian Assicurazioni Generali, French AXA and Swiss Zurich Financial Services are in the shortlist, and the highest bid was submitted by the Swiss company, Vatan quoted sources close to the deal as saying. The report did not specify the amount of the bid submitted by Zurich.

 

Zurich had entered the Turkish insurance market in January by acquiring the general insurer TEB Sigorta A.S. from TEB Mali Yatirimlar A.S. for $200 million.

 

If Zurich closes the deal to buy Yapi Kredi Sigorta, it would raise its market share to 7.12 percent from the existing 1.41 percent with TEB Sigorta.

 

The Wall Street Journal had said AXA, Europe's second-largest insurer by market value after Allianz, is close to finalizing the Yapi Kredi Sigorta deal and the sale could fetch as much as $800 million.

 

With the sale of Yapi Kredi Sigorta around 80 percent of Turkey's 9 billion-dollar insurance sector would be belong to foreign companies. However the biggest problem seen in the sector is low profit margins, which is expected to recover in the coming years.

 

Turkey's fast-growing and fragmented insurance sector has seen a wave of foreign acquisitions in the last couple of years.

 

In the latest wave of foreign acquisitions in the sector, OYAK, the army pension fund, had sold its 50 percent stake in the insurance company to its French partner AXA for $525 million. Dutch Aegon bought Ankara Emeklilik, while Koc Holding sold its shares in the insurance companies to its partner Allianz for $600 million.