Morningstar | Nationale-Nederlanden Buys VIVAT Non-Life, Cheaply
Today Nationale-Nederlanden announced the acquisition of VIVAT non-life insurance for EUR 416 million. This acquisition is being used to consolidate NN’s Netherlands non-life market position. The acquisition will be funded out of NN’s EUR 8.8 billion in cash that is on its balance sheet. We think Solvency will be affected by about 5 percentage points. This still leaves the business with plenty of headroom above what we think is the critical 190 to 200 level. We maintain our EUR 48.0 fair value estimate and no-moat rating.NN is getting a business unit that made a loss of EUR 48 million in 2016, was flat in 2017, and EUR 8 million profit in 2018. After doing some calculations, we think the acquired business is capable of generating about EUR 55 million in net income. This brings the valuation to less than 8 times earnings. This is not a bad purchase price in our opinion. The acquisition, combined with NN’s prior purchase of Delta Lloyd, takes NN to second position in the Dutch non-life market.
This will, unfortunately, create some more short-term noise in NN’s Netherlands non-life results and we expect expenses to be a primary target for management. As we have outlined in our Select report, "Turnaround and Endurance at NN", published in December 2018, we believe the market is becoming more rational. This purchase adds credence to our theory.
NN Group is a financial services company based in the Netherlands. Co. engages in insurance and investment management activities, providing life and non-life insurance products primarily in the Netherlands, Belgium, rest of Europe, and Asia. Co. offers group and individual life insurance; and motor, transport, fire, liability, travel, and income insurance. Co. also offers retirement, insurance, investments, and banking services to retail, SME, corporate, and institutional customers. Co. is active in 18 countries, with a presence predominantly in a number of European countries and Japan.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.