In a sweeping move, Vienna Insurance group has taken over the two insurance companies owned by BCR - BCR Asigurari and BCR Asigurari de Viata. The Austrian-based insurer bought the entire insurance business of Erste Bank, which owns five other specialised subsidiaries in countries in the region.
The total value of the transaction, which involved seven companies, exceeds 1.44 billion euros, or an average price of 1.2 euros per euro of turnover. BCR Asigurari and BCR Asigurari de Viata posted around 200 million euros in gross underwritten premiums last year, whilst the total value of the two companies revolves around 240 million euros.
The deal will be analysed by the local and European competition authorities, and is scheduled for completion in the third quarter.
Erste Bank preferred this option instead of a more transparent process that requests bids being placed, considering this way the deal is more valuable.
"The way we see it, it is precisely the global agreement we reached with Vienna Insurance that gives value to this deal. We also believe that this is the most productive way for our insurance subsidiaries to continue to operate. We found the biggest partner for the biggest bank on the markets," Klaus Bergsman, head of the "Initiatives" group within Erste's strategy department, which devises the avenues worth pursuing for the bank, told ZF.
He believes that if the transaction had been conducted subsidiary-by-subsidiary, the end value would have been less.
As Erste has announced, the revenues from this deal, more than 1.4 billion euros will be used to consolidate its capital base. Erste officials say the sale of insurance subsidiaries had nothing to do with problems in raising cash and the decision to drop this business was not made public for confidentiality reasons.
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