Italian-held Generali has already brought under one umbrella the two companies it controls on the Romanian market, Generali Asigurari and Ardaf, while Austrian group Vienna Insurance (VIG) is preparing the largest merger in the insurance sector, between Omniasig and BCR Asigurari, which will result in a new market leader, with RON1.4 billion (EUR330 million) in revenue.
Generali had come to own two Romanian companies following a joint venture with Czech investment fund PPF, the majority shareholder of Ardaf, while Austria’s VIG have in the last few years made one acquisition after another on the Romanian market, ending up with four major local brands in their portfolio.
VIG decided to include in the merger process only the two companies which exclusively operated on the general insurance segment and which basically competed over the same clients. The Austrian group expects to make cost savings of around EUR10 million per year after the merger, which is set to be finalized in March next year. VIG also controls Asirom and BCR Asigurari de Viata.
“It is surprising they did not do this sooner. The first advantages of a merger are cost-related. But there are also commercial advantages, you have the same fees and you don’t cannibalize the market. In this way, you also make sales more efficient,” says Ioana Filipescu, managing director of Raiffeisen Investments Romania.
Both the Austrian and the Italian group have preferred the variant of the smaller companies (BCR Asigurari and Ardaf respectively) absorbing the larger company (Omniasig and Generali respectively). Both BCR Asigurari and Ardaf posted tens of millions of euros in losses in the last few years and the resulting companies will be exempt from paying tax on future profits until the losses are covered.
(English version by Daniela Stoican; Editing by Radu Bostan)