Helvetia to Buy Nationale Suisse
Helvetia to Buy Nationale Suisse
Swiss insurer Helvetia (HELN.S) is all set to buy Nationale Suisse (NATN.S) in a deal which is estimated to cost 1.4 billion Swiss francs or $1.57 billion. Helvetia is Switzerland's third largest insurer going by gross premiums. This group will offer 80 Swiss francs per Nationale Suisse share which represents a premium of around 26% on the closing price recently.
Helvetia sells life and property as well as casualty insurance. It is the second biggest shareholder in Basel-based National Suisse with 18.7% stake. Nationale Suisse''s board of directors also made the recommendation that their shareholders inlcuding Swiss Mobiliar and insurer Baloise (BALN.VX) accept the offer.
Helvetia's offer comprises 52 francs per share in cash and an equity component. This will create a total of 1.22 million new Helvetia shares in total. Nationale Suisse experienced a rise of 24.8% to 79.25 francs per share recently as a result of this. Helvetia's shares were down by 0.7% to 408.75 Swiss francs per share.
The combined group has also estimated that annual profits of more than 500 million Swiss francs or around $560 million and premiums of 9 billion, according to Helvetia. Nationale Suisse which has around 1,900 people comprises around 20 subsidiaries and branches in European as well as Asian and Latin American markets.
Analysts at J. Safra Sarasin have noted that the transactions appear to make sense from a strategic viewpoint yet seem to be on the expensive side. Helvetia has indicated that the deal would allow for annual cost savings of 100 to 200 million Swiss francs. The transaction will close in the second half of 2014 though it is also subject to shareholder and regulatory approval.
Helvetia Holding AG (HELN) has agreed to purchase a majority stake in Nationale Suisse in a transaction that values the company at 1.8 billion swiss francs or around $2 billion. This will lead to the creation of one of the largest insurers in the country.
Swiss analysts are also of the opinion that the deal is said to have been brought about at costly side. The merged company has a premium volumee of 9 billion francs and a profit potential of more than 500 million francs. The insurer forecasts yearly cost savings of 100 to 120 million francs. Stefan Schuermann, a Zurich based analyst with Vontobel has also indicated that the combination of 2 insurance groups is a natural fit though the price is on the expensive side.
Nationale Suisse has indicated that the “foreign activities of Helvetia and Nationale Suisse complement each other ideally” making this a very meaningful acquisition. It will be sustainably strengthened through the integration of selected business lines from Helvetia. The Speciality Lines unit will incorporate marine/transport insurance, engineering and art along with active reinsurance divisions of both the groups. The life business and international specialty lines will be managed from Basel. A regional non-life hub will also be formed at Basel. All in all, the two companies are set to redefine the insurance services in Switzerland.
