CGNU expands in Spain with £88m acquisition

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CGNU advanced its position in Spain yesterday with a deal to buy a stake in the country's tenth largest bank for £88m.

The UK's largest insurer will buy 50 per cent of the life assurance unit of Caja Espana and plans to sell bancassurance contracts through the division. CGNU already sells insurance products through three other Spanish financial services companies as part of its strategy to increase its business in continental Europe. The Continent is seen as a growth area by UK insurers because other European governments are overhauling taxpayer financed pension systems, requiring individuals to pay for their own retirement through private pensions.

CGNU said in October that nine-month sales rose to £1.73bn, buoyed by a 330 per cent gain in Spain. It has become Spain's fourth largest life insurer after pacts with Unicaja, Bancaja and Caixa Galicia.

Under the deal with the Caja Espana, CGNU will have access to 8 million Spanish customers via more than 3,000 branches. Caja Espana has 1.3 million customers and 535 branches. The British insurer will take management control of Caja Espana's life and pensions subsidiary, Caja Espana Vida, expanding in central Spain's Castilla y Leon region. CGNU shares rose 40p higher to 840p.