EU clears transaction between VIENNA Insurance and ERSTE with conditions
VIENNA Insurance Group (VIG) won permission from the European Commission to buy all the insurance operations of ERSTE Bank in Central and Eastern Europe, subject to divestment of insurance company UNITA, in Romania, and of the minority stake held at Bank Austria Creditanstalt (BA-CA) in Austria.
VIG is already selling UNITA, in order to avoid any obstacles blocking this transaction with ERSTE coming from the Bureau of Competition of the European Commission, announcing exclusive negotiations in this regard with Austrian group UNIQA at the end of May.
"VIG has decided to sell UNITA in the context of acquiring ERSTE insurance units in Romania, namely BCR Asigurari and BCR Asigurari de Viata, in order to to fulfill the EU antitrust requirements", Alexander JEDLICKA, Coporate Communications EEC within VIG has declared for XPRIMM Newsletters
In Romania, in the post-merger position VIG would have reached market shares of over 50 percent for motor liability insurance, over four times that of its nearest competitor, ALLIANZ-TIRIAC.
"The divestiture of UNITA fully eliminates the overlap in all the key segments of non-life insurance and ensures that the rapidly growing Romanian market will continue to benefit from competition, service quality and innovation," the Commission said, quoted by Reuters
In Austria, the proposed transaction would have given VIG around 40 percent market share, almost double the size of its nearest competitor, UNIQA. However, the main concern set to rights by the Bureau of Competition conditions with regard to VIG's position on the local market was avoiding the situation where two out of the three big Austrian retail banks would have distributed VIG's life insurance products almost exclusively
"The sale of Bank Austria Creditanstalt Versicherung AG to competitor ERGO, which until now had only a limited presence on the market, also includes the continued distribution relationship to Bank Austria, thereby ensuring a competitive force remains on the market", the Commission added
At the end of March, ERSTE announced selling its insurance operations in Central and Eastern Europe to VIG, for EUR 1.44 billion, meaning 1.2 euro paid for every euro of turnover of the respective companies. The transaction also includes the sale of shares held at all companies belonging to BCR (Romanian Commercial Bank) in Romania. With European Commission clearing this deal, VIG is going to buy majority stakes in BCR Asigurari and BCR Asigurari de Viata
Thus we can say that the VIG family in Romania - OMNIASIG, ASIROM, OMNIASIG Asigurari de Viata, BCR Asigurari and BCR Asigurari de Viata - has a clear way for the integration of new members and rebranding.
In the first quarter of 2008 in Romania VIG posted a EUR 200.86 million gross written premiums volume, with 89.1% over the level recorded in the similar period of 2007, which includes the ASIROM turnover for the first time. At the same time, total income before tax obtained by VIG in Romania in the first three months was EUR 2.7 million growing 102.9% year-on-year.
Also, VIG divesting UNITA, which also includes the sale of local company AGRAS, both to UNIQA, makes the latter one, Austrian as well, the fourth player on the Romanian insurance market, at a distance of less than one percentage point of GROUPAMA.
Author: Andreea IONETE
on 17.06.2008
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