March 25, 2013 / 4:56 PM / 4 years ago

UPDATE 1-Allianz to buy Yapi Kredi Sigorta for nearly 950 mln euros-sources

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(Adds details, background)

By Asli Kandemir and Sophie Sassard

ISTANBUL/LONDON, March 25 (Reuters) - Germany's Allianz has agreed to buy Turkish insurer Yapi Kredi Sigorta's core insurance arm and a majority stake in its pension unit for nearly 950 million euros ($1.2 billion), sources familiar with the matter said on Monday.

The sources said the deal was expected to be announced in the coming days. Both Allianz and Yapi Kredi Sigorta, the insurance arm of Yapi Kredi Bank, declined to comment.

Yapi Kredi Sigorta shares closed flat on Monday at 21.60 lira, valuing the company at 2.2 billion lira ($1.2 billion).

Japanese company Dai-ichi Life Insurance and Zurich Insurance had also been in the race for Yapi Kredi Sigorta - a joint venture between Turkish group Koc Holding and Italian bank UniCredit.

"Dai-ichi was bidding for the life part only but Yapi decided separating life and non-life would cost too much, operationally and tax-wise, so they preferred selling in one block to Allianz," one of the sources said.

With a population of nearly 75 million whose average age is under 30, Turkey offers lucrative growth opportunities for global insurers.

Government initiatives to encourage savings through private placement plans, which became effective from the beginning of 2013, have made the business more attractive.

Large deals have been few and far between in the sector which means the sale of Yapi Kredi's insurance business will be the largest ever in the Turkish industry.

$1 = 0.7694 euros $1 = 1.8146 Turkish liras Additional reporting by Seda Sezer in Istanbul and Jonathan Gould in Frankfurt; Editing by Nick Tattersall and David Cowell

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