Allianz has signed a binding agreement to sell its 51% stake in its Saudi Arabian unit, Allianz Saudi Fransi (AzSF), to Abu Dhabi National Insurance Company (ADNIC).

United Arab Emirates-based multiline regional insurer ADNIC has agreed to pay SR499m ($133.06m) for the stake.

Allianz said the deal will not impact the customers and employees of AzSF or its solvency capitalisation and cash position.

Set up in 2007, AzSF is a joint venture between Banque Saudi Fransi and Germany’s Allianz.

For the German insurance major, the deal is part of its strategy to streamline its operations in the Middle East market.

The company said its global lines business including Allianz Global Investors, PIMCO, Allianz Trade, Allianz Partners and Allianz Re will continue to operate in Saudi Arabia.

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ADNIC expects the deal to improve its financial performance, increase shareholder value and boost its competitive position in the Gulf Cooperation Council insurance markets, specifically in Saudi Arabia.

In a stock exchange announcement, ADNIC said: “The transaction fits fundamentally within the core of the company’s [ADNIC’s] strategic pillars as it will allow it to further extend its presence into the Saudi Arabian market, deliver and optimise operating model efficiencies between the company and the target company [AzSF], and boost its consumer retail portfolios as a substantial percentage of the target company’s customer base comes from this segment.”

Subject to regulatory approval, the deal is expected to close in the coming months.

Earlier this month, Allianz and Sanlam secured regulatory approval to launch a pan-African company, SanlamAllianz.