Allianz and LV= have agreed a joint venture, which sees the German-owned insurer inject £500m into the smaller company, the groups confirmed today.
LV= will receive £500m from Allianz in exchange for a 49 per cent stake in its general insurance businesses.
The new, long-term joint venture will acquire Allianz's personal home and motor insurer's renewal rights while AIlianz will obtain LV= GI's commercial insurer's renewal rights, with the first stage of the transaction expected to close during the second half of 2017.
The second stage of the transaction will take place in 2019 and will see Allianz pay £213mfor a further 20.9 per cent stake in LV= GI through an agreed, forward purchase based on a total valuation of £1.02bn for 100 per cent of LV= GI.
LV= has a put option under which it can sell all or part of its remaining shares to Allianz.
A potential deal between the two companies was first reported in May, although at one point it was believed that a number of prospective buyers were circling LV=.
"I am thrilled to join forces with LV=, one of UK's most respected and loved brands. This partnership will first and foremost benefit our customers who will have access to an expanded range of products backed by the financial strength of Allianz. We value LV='s strong brand and market positioning," said Oliver Bäte, chief executive officer of Allianz Group.
LV= boss Richard Rowney added: "With this deal, LV= has a positive future in both general insurance and life and pensions. The strategic partnership with Allianz will allow us to continue to benefit from a growing personal insurance business while also enabling us to strengthen our capital position, leaving us well placed to continue to expand our life and pensions business and pursue new digital opportunities."