POLAND: Talanx buys 2nd largest insurer for EUR 770m

 Lisa kommentaar

A couple of weeks ago few people in Poland had ever heard of German insurer Talanx, despite the latter's strong number three position on its home market. Certainly even fewer had known anything about Meiji Yasuda, the second largest player in Japan. However, consumers and competitors alike better get acquainted with these brands, as the
German-Japanese have just invested close to EUR 1bn on the Polish market.

Less than a month after their December acquisition of Polish mortgage insurer Europa for slightly more than EUR 200m, Talanx and Meiji Yasuda have sealed a deal that catapults them to number two position on the Polish market.

At the cost of EUR 770m or roughly PLN 3.3bn Talanx International is to acquire 100% of shares in Warta from Belgium's ailing KBC group. After closing of the transaction, Talanx' Japanese partner Meiji Yasuda will take over 30% of the Warta shares from Talanx.

Talanx beat a number of prime competitors, including Austrian Vienna Insurance Group, Swiss Zurich and Italian-Czech Generali. According to unofficial reports, the remaining bidders refused to offer much more than EUR 600m for the Polish insurer. Taking advantage of the weak position of other European insurers, which continue to struggle with effects of the euro zone crisis, the German-Japanese duo grabbed a sizeable chunk of the Polish market.

In 2010, Warta Group, which consists of life & non-life subsidiaries, reported gross premium income of approximately EUR 1bn (life EUR 560m; non-life EUR 443 m). Warta serves a total of 1.5m customers with two thirds in non-life being private clients and one third corporate clients. With a workforce of over 2,765 employees the Group operates a distribution network of 8,000 tied and multi-tied sales people accessed through 4,000 agencies and approximately 240 Warta branch offices. Warta is also one of the leading Polish industrial insurers. It commands a particularly strong market position in marine and aviation insurance.

Still way behind PZU

Prior to the Europa and Warta deals, Talanx had been operating in Poland through two companies in motor, general liability, property and life insurance: HDI Asekuracja and HDI-Gerling Zycie. In the first three quarters of last year, HDI, Warta, and Europa had a combined gross premium income of PLN 7.3bn. Moreover, as part of the Europa takeover, Talanx had agreed to purchase a 51% stake in a small insurer Open Life from Europa's owner Getin Holding. Open Life posted gross written premiums of approx. PLN 600m in 2011.

Although this is still light years behind Polish PZU group, which continues to reign supreme with a gross premium income of PLN 14.1bn in the same period, but Talanx looks like the first competitor capable of challenging PZU's position in the long term. Following the Warta takeover Talanx will hold an estimate 15% in the non-life segment and 19% in the life segment of Poland's insurance market.

news2biz asked Talanx about their vision for the Polish business and potential adjustments to Warta's employee numbers.

"The closing of the Warta and Europa transactions are expected to be completed in 2H and Q2 of 2012 and they are subject to customary regulatory approvals. For the time being, this is what we concentrate on. Therefore, further details cannot be discussed at this point of time," Martin Schrader of Talanx's head office in Hanover told news2biz. "As for the future of the Warta brand, again, it is too early to make any decisions in this regard. But Warta is one of the most established insurance companies in Poland with a very strong brand. And Talanx is a multi-brand holding used to operate with different brands even in one country."

Asked about the possibility of further acquisitions in Poland and cooperation with KBC subsidiary Kredyt Bank, which has been Warta's bancassurance partner, Mr. Schrader replies:

"We do not have any precise plans for further acquisitions in Poland at the moment. The existing bancassurance collaboration between Warta and Kredyt Bank regarding the distribution of Warta's insurance products through the
Kredyt Bank branch network will remain in place for the foreseeable future."

Talanx's acquisitions in Poland are in line with its international expansion strategy, which considers CEE and Latin America as target markets. Talanx aims, in the long run, to grow the foreign share of gross premiums from primary insurance (industrial lines and retail) to half of the total gross premiums from primary insurance.

Poland is one of the largest insurance markets in CEE and already one of the most important markets by revenues, and according to Talanx the characteristics of this market indicate the potential for further growth.