World's leading money transfer company, Western Union Co. (WU) has signed an agreement with Allianz SE, a German multinational financial services company. Per the agreement, the two leading companies will together devise, develop and distribute insurance products in several countries across the globe.
The pact will also strengthen insurance and financial services penetration in the developing economies of Middle East and Africa.
Since the focus is on insurance products, Allianz will be responsible for designing the products, while Western Union, with its large agent network, will engage in marketing them.
Life, property and health insurance are all witnessing increased demand due to growing awareness. The existing customer base of both the companies will be primarily targeted for the new products. Western Union estimates that approximately 2 billion people are financially underserved across the globe and thus intends to serve them.
Western Union has been on an expansion spree, both in terms of its products and services as well as geographic reach. The agreement with Allianz is in tandem with its expansion plans. Earlier this month, Western Union announced the launch of its digital wallet. Via this new service, Business Solutions customers who use Online FX service platform for their transactions will be able to deposit and retain funds in their virtual wallet. These funds can be used later for making email payments anywhere around the globe. Western Union also announced the extension of its service with CORREOS, the national postal service provider of Spain, by signing a new 5-year agreement.
Last week, Western Union completed the acquisition of the French operations of leading cross border payments company, Travelex Global Business Payments.
Close rival MoneyGram International Inc. (MGI) is also aggressively expanding its operations. Recently, the company announced its expansion in Mexico and Venezuela and also launched an online service in UK.
Western Union currently retains a Zacks # 3 Rank, which translates into a short-term ‘Hold’ rating. We are also maintaining our long-term “Neutral” recommendation on its shares.
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