Information about a possible merger between the two insurers initially surfaced last year, but the Austrian group has constantly denied it. VIG chief executive officer Peter Hagen himself stated in May, in a meeting with Romanian journalists, that the group’s shareholders want to keep all the three companies they own in Romania.
However, the tone of talks changed, with Vienna representatives now telling ZF only that they would not “comment on market rumors”. The representatives of the two companies would not comment on the issue, either.
Should the merger materialize, the Austrian group would come to control Romania’s largest insurance company, with an 18% market share, considering the overall revenue of the two insurers.
However, the new entity is little likely to come to hold 18% of the market, given what happened in the previous year’s mergers (Asiban-BT Asigurari, Generali-Ardaf or Omniasig-BCR Asigurari).
Omniasig, ranking third on the market of general policies, is the biggest company in the Austrian group’s Romanian portfolio, with 881 million lei (EUR200 million) worth of underwritten premiums in 2013.
Asirom, though, ranked as low as seventh and cumulated premiums worth just RON544 million. Until 2003, Asirom led the Romanian insurance market, but subsequently started to lose market share as it came to report significant losses year after year.
Beside Asirom and Omniasig, the Austrian group is also present in Romania through BCR Asigurari de Viata, a company that is also undergoing restructuring after logging losses in 2013 and changing its management.
The Omniasig-Asirom merger would not be the Austrian group’s first move of this type in Romania. In 2011, the group surprisingly decided to consolidate its general insurance operations (Omniasig and BCR Asigurari) in a single entity, in an attempt to slash costs.
Market sources state the merger between Omniasig and Asirom would make sense as the Austrian group’s losses have deepened and Asirom’s situation has worsened.
In 2013 alone, the Austrian group reported overall losses of RON468 million, namely one third of total market losses. Asirom reported the widest loss, of RON236 million, closely followed by Omniasig, with a RON217 million loss in 2013.
However, a merger between the two would be more challenging because of portfolio differences. Asirom is also present on the life insurance market, with the segment bringing it one fifth of revenue.
If a merger is decided, it remains to be seen how integration will be completed. The new entity may also take over life insurance operations or these could be transferred to BCR Viata.
Another issue would be the name of the new entity, considering both Asirom and Omniasig are two strong brands. A scenario where the sales network of the new entity would keep both brands is little likely considering the Generali-Ardaf case, where Ardaf brand eventually disappeared.
Should it clinch the Omniasig-Asirom merger, VIG would have just two companies left on the market, after having reached a six-insurer portfolio at a certain moment. Moreover, such a move would not match the group’s strategy, after the Austrian group has long insisted on the multi-brand strategy it applies on all the markets it operates on. (EUR1=RON4.4408)
(English version by Catalina Apostoiu)