Generali, PPF Create Joint Insurer for Eastern Europe

Italy’s Generali Group has concluded an agreement with PPF Group N.V., an international financial group, headquartered in Amsterdam, Netherlands, which is 95 percent controlled by Petr Kellner, a Czech entrepreneur with a strong track record of success. PPF Group in turn controls the Czech Republic’s Ceska pojistovna Group, a composite insurer based in Prague and with operations in Czech Republic, Russia, Slovakia, Kazakhstan and Ukraine.

In a joint press release the two companies said the agreement “accelerates both Groups’ strategies for expansion in one of the insurance world’s most attractive regions and creates a strong platform for further expansion opportunities in the region and adjacent territories.”

The new joint venture, “JV,” will be 51 percent owned by the Generali Group and 49 percent by the PPF Group. Ceska pojistovna is the Czech Republic’s leading insurer, as well as a leader in consumer credit business in the five 5 Eastern European countries.

Based on pro-forma 2006 data, the JV’s annual gross written premiums will exceed €2.6 billion ($3.53 billion), with an Embedded Value of €2.3 billion ($3.13 billion) and over 9 million customers in 12 countries.

Generali will contribute certain assets as well as €1.1 billion ($1.5 billion) in cash to PPF. Kellner will be nominated to the list of Generali Board members to be proposed at the next Annual General Shareholders Meeting, while Sergio Balbinot, Co-CEO of Assicurazioni Generali, will become the Chairman of the JV. Ladislav Bartonicek, Chairman of Ceska pojistovna Board of Directors, will become its CEO.

The agreement values Ceska pojistovna Group at €3.6 billion ($4.9 billion) and Generali’s CEE assets at €1.5 billion ($2.04 billion). Generali estimated that the deal would “be earnings accretive for Generali Group by 2.2 percent on IFRS earnings and 2.1 percent on EV earnings.”

The combination will unite all of Generali’s and PPF Group’s insurance assets in the CEE region, giving the combined group “unrivalled reach across the following twelve countries: the Czech Republic, the Slovak Republic, Poland, Hungary, Romania, Bulgaria, Ukraine, Russia, Serbia, Slovenia, Croatia and Kazakhstan.

Commenting on the agreement, Sergio Balbinot, Generali Group Co-CEO stated: “Generali’s historical ties to the CEE region are well known. Since returning to Hungary* we have developed our presence so that we currently operate in 10 countries, serving some 4 million customers. To further this success, we have been looking for the right partner with whom we can take the business to its next stage of development. We have found that partner in PPF Group and Ceska pojistovna Group. By joining forces we become the leading player in CEE with a pool of over 9 million clients.”

Bartonicek added: “PPF Group has a proven track record of value creation in the CEE region through its successful transformation of Ceska pojistovna into a highly profitable and growing business, with strong distribution and a history of innovation. We are the market leader in the Czech Republic and this partnership provides a springboard for our continued success in the wider region.”

*Ed. note: Generali’s official headquarters are in Trieste where it was founded in 1831 (even though most of its business operations are conducted in Milan). The city was formerly part of the Austro-Hungarian Empire until it was placed under Italian sovereignty, following the break-up of the Empire after World War I.