French group AXA, with more than 91 billion euros in turnover, is about to enter the local insurance market and will do it by acquiring Omniasig Life, a small life insurance company, controlled by the Austrians at Vienna Insurance Group, Ziarul Financiar (ZF) reported.
The value of the deal is lower than 10 million euros, according to certain estimates.
The French have been trying to buy a local insurer for a number of years but every attempt has failed. In 2008 they participated in the tender to take over Asiban and Unita, but the price offered was lower than the competitors'.
Eventually, AXA announced at the end of last year that it would increase its capital by 2 billion euros to finance acquisitions.
Vienna Insurance, the owner of Omniasig Life is the biggest group on the local insurance market, as it also owns Omniasig, Asirom, BCR Viata and BCR Asigurari.
"The contract with AXA was signed in December 2009. The completion of the deal will take place in the first half of 2010, depending on how soon the authorities approve it. The parties decided not to go public with the value of the deal," Alexander Jedlicka, Vienna Insurance spokesman told ZF.
The insurance market has been experiencing an acquisition rush over the last few years and prices have risen spectacularly. For instance, another French group, Groupama, paid 350 million euros in 2008 to buy Asiban, one of the biggest players on the insurance market, which is double the gross premiums underwritten (an index that gauges the business volume in the insurance sector). With the crisis still raging, insurers are most likely trading at multiples of 0.8-1 of the gross premiums underwritten.
Omniasig Life posted about 14 million euros in turnover in 2008, which put it at the bottom of the ranking of the top ten players in the life insurance business. Last year, however, companies on this market were severely hit by the crisis, and Omniasig Life dropped out of top ten. Under the circumstances, the price AXA will pay will be below 10 million euros, according to certain estimates. Omniasig Life had a 2.7% share of the life insurance market in 2008, according to the latest official data available.
Source: Ziarul Financiar