Competitors join forces in preparations for boosted entry into evolving Indian market
Breaking new ground in the booming Indian market: Allianz offloads stakes and charts the future.
At first sight, it seems counterintuitive. Allianz is unloading its 26% shares in two Indian joint ventures in the life insurance sector to its partner, the Bajaj Group. While Allianz faced frustration due to its partner's refusal to grant co-determination rights and blockage against an increase in stake, the price played a pivotal role. The €2.6 billion earnings from the deal will reportedly yield approximately half as profit by 2025.
As a brief context, Allianz clocked around €16 billion in operational profit in 2024, a leap of 9% from 2023. The company aims for operational profit of €15 to €17 billion for 2025, a significant portion of which is already realized in the first quarter via the sale. By 2027, Allianz intends to raise earnings per share by 7 to 9% annually. A substantial part of the adjusted net income will be allocated to dividends and share buybacks in order to achieve this growth. Evidently, India continues to be a captivating market for Europe's insurance titan. Once the proceeds from the Bajaj Group joint venture separation are accessible, Allianz plans to commit to strategic ventures in the country.
Allianz (WKN: 840400) ## 20% upside possible with Allianz shares?
According to a report by news agency Reuters, discussions have taken place with Jio Financial Services regarding the formation of a joint venture in life and property insurance. Jio Financial Services was spun off from the conglomerate Reliance Industries owned by Indian mogul Mukesh Ambani in 2023.
Allianz's preceding joint venture experience in India suggests that the market is both tricky and alluring. The insurance penetration rate, or the ratio of premiums to GDP, is considerably lower than, for instance, South Africa. According to the Organization for Economic Cooperation and Development (OECD), India's per capita income is expected to grow by an average of 5.4% every year until 2033. This impressive growth rate is advantageous for the insurance sector's dynamics. Life insurance comprises the largest portion, accounting for 74% of the volume. The 2025 life insurance premium volume is estimated at $116 billion, with an annual growth rate of about 7% by 2029 anticipated.
Target Price: €420 - over 18% upside potential!
In case you're interested, this piece originally appeared in the latest print edition of BÖRSE ONLINE. You can find it here
Also read: Stock price rebound imminent? Goldman Sachs provides the answer
Conflict of interest noteThe publisher Börsenmedien AG's board and majority shareholder, Mr. Bernd Förtsch, has assumed positions, both direct and indirect, in the financial instruments mentioned in the article or related derivatives that could profit from the price shift resulting from the article: Allianz.
- Allianz, a prominent player in financial services, is exploring potential strategic ventures in India after offloading its shares in a previous joint venture, demonstrating a continued interest in the booming Indian market.
- The shift in Allianz's Indian business strategy includes discussions with Jio Financial Services regarding a possible joint venture in life and property insurance, pleasing investors who see a potential 20% upside in Allianz shares.
- Amidst the country's impressive economic growth rate and high potential for growth in the insurance sector, analysts have set a target price of €420 for Allianz shares, reflecting an over 18% upside potential – a promising outlook for general-news focused on technology, business, and investing.
