The two parties agreed not to disclose the transaction’s terms and conditions, AXA said in a press release Friday.
People close to the matter told Ziarul Financiar earlier, Astra took over the local unit of AXA. It is for the first time in 23 years that a Romanian-owned company takes over a foreign-held company.
Astra will integrate AXA Asigurari in a merger process and the reason for the deal was to strengthen its life insurance portfolio. Astra is controlled by businessman Dan Adamescu.
The deal entails takeover of 50,000 contracts and an annual business of EUR10 million. The same sources say AXA has very good solvency margin and liquidity. AXA Asigurari could not confirm the deal by the time the story was ready for posting.
AXA Asigurari was not valued at a multiple of the gross written premium but on an embedded value basis (the present value of future profits plus adjusted net asset value). The deal also includes 50 or 60 buildings, where AXA’s territorial offices are.
AXA also put up for sale its Hungarian subsidiary, but has not reached an agreement there yet, where it has several suitors. Violeta Ciurel, the chief executive officer of AXA Asigurari, has also been supervising the Hungarian operations of the French group since last year.
The decision of AXA to leave Romania comes only two and a half years after its official entrance. AXA bought a small insurer in 2010, Omniasig Life, but officially launched in May 2011.
It has invested about EUR40 million in the local subsidiary, as it had big plans for growth, meaning it intended to become a top five insurer in three years’ time. The difficult economy that made many customers cancel their life insurance policies has prevented AXA from reaching its goal.
It had less than 17 million lei (EUR3.8 million) gross written premiums in mid 2013 and a market share of almost 2%. It made massive investments in promotion and in expansion of its territorial network. It used a novel business model for a life insurer, developing a network of about 50 branches. Such a network would have given it the option of adding general insurance to its business, but it chose to give up and exit altogether.
AXA is the third life insurance company to leave Romania in the last two years, after UK’s Aviva and Netherlands’ Eureko.
AXA is present in 57 countries and registered turnover of EUR90.1 billion last year. At the end of 2012, the group administered assets worth EUR1.116 billion.
Astra Asigurari’s revenues from underwritten premiums amounted to RON601.7 million in the first half of 2013, up 16% on the year.
The company was set up in 1991 and has a share capital of RON192.71 million. It is controlled by The Nova Group Investments Romania SA, which owns 72.68% of the shares, Epsilon Estate Provider SRL, with a 27.02% stake, and several individuals and legal entities, with 0.3% of the shares.
The Nova Group Investments Romania and Epsilon Estate Provider are controlled by Dan Adamescu.
Astra Asigurari operates two units outside Romania, in Hungary since 2010 and in Slovakia, since December 2012. (EUR1=RON4.4412)
(English version by Loredana Fratila-Cristescu)