European Morning Credit: Today in European Credit

Research evidence excerpt

European Morning Credit: Today in European Credit

Financials

Allianz (AVLGR): Purchase of HSBC Singapore insurance

Allianz agreed to buy HSBC’s Singapore insurance business for $2.1bn, which is a

composite insurer focused on life and health. The company generated €80mn operating

profit in FY25 (vs Allianz’s €17.4bn). The deal has a 15-year distribution partnership.

Singapore would become one of the biggest markets in Allianz’s life and health business

in Asia, likely for what we estimate to be a small single-digit impact on the solid 221%

end-1Q26 Solvency II ratio. The acquisition is consistent with Allianz’s previously stated

intentions and is set to close in 1H27 subject to regulatory approvals.

Bottom line

We see the acquisition positively, although not a spread driver for today. We continue to

see Allianz as the gold standard composite insurer in our coverage universe with three

well-performing businesses across life & health, property & casualty and asset

management. While we mostly have MWs, we see pockets of value in Allianz e.g. OW the

$5.824% ’53-33 Tier 2s at Z+114bps.

Issues to consider

• Allianz already attempted a similar acquisition in Singapore in 2024, when it

ultimately pulled out of the purchase of Income Insurance.

• For HSBC, the deal adds 15bps to its 14.0% CET1 ratio as of end-1Q26 as a result

of a pre-tax gain on sale of $1.8bn at consolidated level. We see it as part of a

simplification trend: the bank’s clients would still be able to access the insurance

products for the duration of the 15-year distribution agreement, but in a ‘capital-

light’ way for the bank. HSBC is due to report 2Q results on Tuesday 4th August.

(Luis Garrido)

Sabadell (SABSM): 2Q looked fine

We thought 2Q looked fine this morning, but still subdued overall. Net income of