Línea Directa Aseguradora, a Bankinter subsidiary, is preparing the ground for its IPO. To convince investors of the company’s benefits, it is organizing meetings in which it details growth forecasts. Although car insurance continues to be its main business, the company expects to grow especially in health insurance (its subsidiary Vivaz) and home insurance, seeking alliances with electricity, telecommunications and alarm companies.
Olga Moreno, Head of Home Policies, explained to mutual fund managers and other interested investors that they will seek to partner with large service providers to offer joint discounts. “For example, we could give lower prices to customers of a power company that we partner with.”
They will also seek alliances with gas companies, water companies, security companies … and other strategies “to incorporate large client portfolios,” said the directive.
In addition, they expect to grow in second home insurance, in agreements with home developers and in insurance for non-payment of rental income.
Last year this division entered 121 million euros and obtained a result of 6.7 million euros. Meanwhile, Línea Directa’s car insurance entered 755 million, with a technical result of 146 million. The company’s aggregate profit amounted to 134.8 million euros.
Línea Directa also wants to grow strongly in its health insurance division. “It is a very fragmented market, despite the fact that the three main players are very large. In addition, our proposal with Vivaz is allowing us to attract clients who have never had health insurance before ”, pointed out David Pérez-Renovales, the group’s health director.
One of the great attractions of Línea Directa to attract investors is the high level of distributed profits. In the last five years, Línea Directa has distributed 558 million in dividends to Bankinter, which still controls 100% of the company.
Between 2017 and 2019, the average pay out (percentage of profit destined to dividend) of Línea Directa was 109%, a level higher than the average of its competitors, according to the presentation document that the insurer has delivered to investors.
The company’s objective is to exceed a pay out of 70% and a return for the shareholder above 25%.
Línea Directa’s solvency goal is set above 180%. This indicator is now 276%, but it yields to 213% if the 120 million euros that are still in the firm are not accounted for, but that will come as compensation to Bankinter before the insurer begins to quote on the continuous market.
The current valuation of the insurer is 1,434 million euros. Bankinter will list 82.6% of the company.