Talanx AG bought Poland’s Towarzystwo Ubezpieczen i Reasekuracji Warta SA from KBC Group NV for 770 million euros ($999 million), beating rivals in a bid to expand in eastern Europe’s largest insurance market.
When the purchase is completed in the second half of 2012, Talanx’s Japanese partner Meiji Yasuda Life Insurance Co. (0017) will take over 30 percent of Warta, Poland’s second-largest insurer, the Hanover, Germany-based firm said in a statement today.
Talanx, Germany’s third-biggest insurer led by Chief Executive Officer Herbert Haas, sold a 300 million-euro bond to Meiji Yasuda (0017) in 2010, which will be converted into shares in case of an initial public offering the German insurer has been considering for more than a decade to fund international expansion. Poland, central and eastern Europe’s biggest economy, accounts for 40 percent of insurance premiums in the region.
“Through the acquisition of Warta we are participating to a much greater extent in the further development of this highly dynamic insurance market,” Talanx management board member Torsten Leue said. “We are making a decisive step to reach our strategic growth target.”
KBC rose as much as 10 percent in Brussels trading and was up 4 percent at 12.04 euros at 12:14 p.m., giving the company a market value of 4.3 billion euros.
Vienna Insurance Group AG (VIG) and Zurich Financial Services AG (ZURN) were the leading bidders for Warta, according to a Dec. 14 report by Polish newspaper Rzeczpospolita, while Talanx, Allianz SE (ALV), Assicurazioni Generali SpA (G) were also shortlisted. Vienna Insurance CEO Guenter Geyer said in October that he was interested in Warta.
Warta is the second Polish takeover announced by Talanx within two months, after the company said in December that it will pay 912 million zloty ($275 million) for a controlling stake in the insurer Europa SA. Meiji Yasuda will buy a stake in Europa from minority shareholders in a public offer.
The German insurer is seeking to expand its retail business in markets such as South America, eastern Europe and Turkey, as well as its industrial insurance arm. The company’s past acquisitions include Deutsche Postbank AG’s insurance units, which it bought for 550 million euros in 2008, the 2005 purchase of Brazilian property and casualty insurer HSBC Seguros and the 2006 takeover of Turkey’s Ihlas Sigorta AS.
Talanx will continue working with Warsaw-based Warta’s existing management team, CEO Haas said.
“We plan to invest further in the business, maintaining each of the subsidiaries and further improving the service and product offer to the clients,” he said in the statement.
Warta, Poland’s second-largest insurer after state- controlled PZU SA, has 1.5 million clients and premiums of 3.6 billion zloty in the first nine months of last year. Earnings at Polish insurers fell 13 percent to 5.21 billion zloty over that period.
The acquisition is among the biggest in Poland’s financial- services market after Banco Santander SA, Spain’s biggest bank, last year completed a purchase of Bank Zachodni WBK SA for 2.9 billion euros.
KBC, the recipient of 7 billion euros in Belgian government rescue funds during the financial crisis, last year got European Commission approval to sell Warta as well as its 80 percent stake in Kredyt Bank SA.
KBC Capital Boost
The sale of Warta is expected to release almost 700 million euros in capital for KBC based on figures at the end of September, the company said in a separate statement. The sale will boost KBC’s earnings by about 300 million euros at the time of closing of the transaction, the Brussels-based company said.
“Taking the decision to divest Warta was a very difficult one, especially in view of its profitable growth in recent years,” said Jan Vanhevel, CEO of KBC. “This divestment releases a significant amount of capital and further strengthens the KBC group, with its focus on its core bancassurance expertise and markets and with its reduced risk profile.”
Talanx, owner of a 50.2 percent stake in Hannover Re (HNR1), is fully owned by German mutual insurer HDI Haftpflichtverband der Deutschen Industrie VaG. It is working with Deutsche Bank AG (DBK) on an IPO as it forges ahead with plans for a share sale this year, three people with knowledge of the matter said earlier this month. The Frankfurt-based bank will help prepare the listing alongside Rothschild, which was mandated in April as the IPO adviser.
An IPO may raise between 1 billion euros and 1.5 billion euros, depending on market conditions, and would take place in the second quarter at the earliest, some of the people said.