Catalana to buy 100% stake in French mutual

Spain flag

Groupama will sell its Spanish operations to Catalana Occidente for 405.5m Euros, the Spanish insurer has confirmed.

Groupama España writes 904m Euros in gross premiums per year, 38% of which is from motor.

Groupama put its UK insurance business up for sale at the end of last year after taking a 2.8bn Euro hit from the Eurozone debt crisis.

Catalana will buy a 49% stake in Groupama España for 198m Euros, while its largest shareholder (the Serra family) will buy the remaining 51% for 206m Euros.

Catalana will have an option to get take control of Groupama in three years time by paying the same price over 27m Euros premium while paying its shareholder Euribor +400 basis points over the next three years, net of dividends.

In June Groupama said it would sell the property and casualty brokerage-related segment of its Gan Eurocourtage subsidiary to Allianz’s French unit.

The French mutual reported a net combined ratio of 97.4% in 2011 - a significant improvement on the 104.9 percent posted in 2010.

Following the results, ratings agency Standard & Poor’s (S&P) said it would keep its BBB- long-term counterparty and financial strength ratings on the group on credit-watch with negative implications.