Talk of takeover bid from Allianz puts QBE in play

A $20bn bid for QBE reportedly being considered by the world’s biggest insurer Allianz has intensified takeover talk.

QBE chief executive John Neal. Picture: Renee Nowytarger.

A $20 billion bid for Australian insurance giant QBE reportedly being considered by the world’s biggest insurer Allianz has intensified speculation that several global heavyweights are stalking the resurgent local insurer.

A report in the German newspaper Handelsblatt said Allianz chief executive Oliver Baete met with QBE boss John Neal before Christmas and had informally ­offered a deal of $15 a share for the Australian company.

The report, though denied, has thrown the spotlight on to the local financial services sector, which is increasingly the subject of interest from offshore buyers.

QBE shares rocketed on the news to their highest point in more than a year, but the stock pared gains after a spokesman said there was no formal offer and industry consolidation was not part of its strategy.

The mooted offer price would represent a 22 per cent premium to QBE’s Friday closing share price of $12.33, and comes after the stock has been on a steady rally since the election of Donald Trump, jumping more than 30 per cent after the US vote.

“QBE has a clearly articulated strategy that builds upon our differentiated position as one of only a handful of truly global insurers,” the spokesman said. “Participation in industry consolidation is not a part of this strategy and there is no basis to speculation ­either that this strategy is under review or that QBE has received a corporate proposal.”

QBE shares ended the day just 2c higher at $12.35.

In a statement to the market, the company said: “While it is QBE’s policy not to comment on rumour or media speculation, QBE confirms that it is not in discussions with Allianz or any other potential buyer.”

A $15-a-share deal would value QBE at $20.6bn and would be ­Allianz’s second-largest acquisition since 2001.

It would also be one of the largest insurance mergers ever. The record is a $US29.5bn deal from Swiss company ACE, which bought property insurer Chubb in 2015.

Locally, Warren Buffett’s Berkshire Hathaway paid $500 million to buy into Insurance Australia Group in 2015 with a quote-share arrangement.

In the life insurance sector, National Australia Bank sold 80 per cent of its business to Japan’s Nippon Life, Macquarie sold its business to Zurich, and TAL was bought by Dai-ichi Life.

AMP recently signed a reinsurance deal with Munich Re, while Clearview signed a 15 per cent stake deal with Sony Life.

“QBE has a lot of interest overseas, so never say never,” Bell Potter Analyst TS Lim said, adding that offshore buyers sought Australian investments for the relatively high yields.

“Especially for the Asian life insurance companies, they find it very attractive. They are used to running life insurance companies, and on a relative scale it’s usually more attractive than in their home countries,” he said.

QBE was asked late last month if the company was the subject of a takeover attempt, but a spokesman at the time said there were no negotiations. Mr Neal was in ­Europe at the time.

The Handelsblatt report stopped short of calling the talks between Mr Baete and Mr Neal a takeover negotiation. The report noted that the two CEOs met, and separately that Allianz was considering the QBE takeover offer.

“We don’t wish to participate in rumours or speculation,” an Allianz spokesman told The Australian. Allianz already has a $90m stake in QBE.

With operations around the globe, Mr Neal spends about half the year in Sydney. It is understood he was on holidays in Europe before Christmas. He was based in London before returning to Australia in 2011 to be QBE’s chief of global underwriting operations. Before that, he was chief underwriting officer for the group’s European businesses and chief operating officer for Euro­pean operations. He meets regularly with executives of other global insurers.

Recent reports suggested QBE had been approached by investment banks seeking defence mandates from potential acquirers. Allianz and several Chinese insurers have laid out plans for acquisitions and deals to secure new distribution arrangements. Allianz recently set aside €3bn ($4.25bn) for corporate purchases.

Earlier this month Italian newspaper La Stampa said Italian bank Intesa was considering buying a stake in Assicurazioni Generali, the largest Italian insurer and the world’s third biggest, and suggested the stake could be part of a broader deal between Intesa and Allianz. Allianz also paid $US200m for distribution rights with Standard Chartered in Asia.

Buying QBE would be an unusual turn for the German insurance giant, which has generally avoided the exposure to the US market. Although it operates in about 40 countries, QBE gets 90 per cent of its revenue from the US, Australia and Europe.

“One could say they complement each other, but QBE is a US and Lloyds insurer and they’re the two parts of the market Allianz has historically avoided,” Credit Suisse analyst Andrew Adams said.

“QBE is trading at a 30 per cent premium to European companies. Chuck a 20-30 per cent premium on top of that and it’s pretty hard for European insurers to make the metrics stack up and buy into QBE.”