Lebanon’s Bank Audi Sells Stake In LIA To Saham

Lebanon-based Bank Audi finalized its sale Wednesday of a majority stake in its LIA unit – an estimated over-$100 million transaction – to Saham Finances, a top player in the African insurance market.

A banking official estimated that the deal netted Bank Audi more than $100 million. The exact financial terms of the deal were not revealed, however it was reported prior to the publicized negotiations for the LIA sale in May that Abraaj Capital, a private equity manager, had invested approximately US$125 million in the Saham Group.

Bank Audi and Saham will move forward under a joint cooperation agreement giving LIA a signature presence throughout Africa in the field of bancassurance.

Casablanca-based Saham Group – an insurance holding company that boasts a presence in 15 African countries (including Morocco) through its ownership of 20 insurance companies, one reinsurance company and two support companies – acquired an 81 percent capital stake in LIA under the terms of the deal unveiled Wednesday at the Beirut Bank Audi headquarters. For Bank Audi , the partnership was a chance to get out from under restrictive local regulations and achieve some business synergy with a well-placed African-based insurance player.
“Our objective to disinvest from the insurance business is tied to the regulatory constraints which are becoming more and more restrictive on insurance companies held by banking groups,” said Raymond Audi , the bank’s chairman.

“Bank Audi will continue to offer to its customers the range of LIA’s bancassurance products and thus maintain and develop the existing cooperation with LIA.

“We are confident that our new partnership with Saham Finances will be productive and will benefit our customers. The fact that Saham … intends to use Lebanon as its main hub to support its expansion strategy in the Middle East constitutes additional proof of … its [Lebanon’s] attractiveness to foreign investment,” he added.
Under the terms of the agreement, Saham will retain the current management team of LIA as part of its expansion plans.

At end-March 2012, Bank Audi a reported $28.7 billion in consolidated assets, principally driven by private customers’ deposits. The group has over 4,800 staff. By assets, Bank Audi is the top bank in Lebanon and is comfortably positioned among key regional banking players.

Incorporated in 1975, LIA has a business base in a range of insurance products including car and health insurance, and has a large in-country bancassurance network encompassing 80 branches. The insurance subsidiary is present in Beirut, Tripoli, Saida, Zahle, Hazmieh, Msaitbeh and Zouk.

In a statement, Moulay Hafid Elalamy, chairman of the Saham group, said: “We are very pleased to join resources with Bank Audi thanks to LIA Insurance and believe in the ability of our partner to ensure that we benefit from its broad regional network and expertise, which will undoubtedly help achieve our long-term goals.

In a March report, Matteo Stefanel, senior partner at Abraaj Capital, an investor in Saham, said: “As a leader in the insurance sector in Morocco and Francophone West Africa, we see tremendous growth opportunities for Saham Finances . The company has one of the best management teams in the sector and a history of successful acquisitions and integrations.”

This is the first major acquisition of a Lebanese insurance company by a foreign firm over the course of the last several years.
The industry association announced in early June that while profits from premiums were nominally up, the total number of contracts written going forward dropped a precipitous 13 percent for the first quarter of 2012, compared to the same period a year ago.

A number of industry experts said the insurance sector is set for a shakeout of mergers, given increased competition during the tight economy and possible changes in regulatory capital requirements, which would favor larger companies with more money in the bank, the Daily Star reported.