Italy's Generali group is to combine its operations with the PPF Czech group in Central and Eastern Europe, which will lead to a possible merger between Generali, Ardaf and Roumanie Assurance International-RAI on the domestic market.

With gross underwritten premiums worth around 148 million euros in 2006, the new company or group of companies ranks fourth among Romania's insurers and could compete for one of the top three positions that are currently filled by Allianz-Tiriac, Asirom and Omniasig.

"The new company will unite all the insurance firms Generali and PPF hold in Central and Eastern Europe securing a strong position in 12 countries. (...)," stated Generali officials.

Ardaf, RAI and Generali Romania officials were unavailable for comment on the details of a possible merger by the time the story was ready for print.

Following the agreement, Generali will pay 1.1 billion euros to PPF to gain control over the majority stake in the new insurance company. The new entity would own both Generali assets in the region and PPF's, including Ceska Pojistovna, the biggest Czech insurer.

"In the wake of this merger, we're to become the main operator in Central-Eastern Europe, with over 9 million customers. We plan to take advantage of this position to speed up our rapid growth in the region," stated Sergio Balbinot, the delegate manager of Generali group.

The value of Generali assets involved in the deal amounts to 1.5 billion euros, while Ceska Pojistovna was assessed at 3.6 billion euros. The deal is likely to be concluded in the second half of this year and should drive Generali's net income up 2.2% by 2008.

Domestically, Generali last year saw its gross underwritten premiums increase by 129% to 296 million RON (84 million euros), and posted losses of 6.9 million euros. PPF entered the domestic insurance market by acquiring RAI