Allianz Poised To Expand In Russia
London Editor
The German insurer Allianz AG plans to significantly expand its activities in Russia with the purchase of a 45 percent stake in ROSNO, the third-largest Russian insurance company in terms of gross premiums written with a total market share of approximately 6 percent.
With this step, Allianz will be the first international insurer to take a major stake in a leading Russian insurance company. In the future, Allianz will have an option to increase its stake in ROSNO, which does property-casualty business and roughly the same amount of life and health insurance sales, according to a representative of the Munich-based Allianz.
The parties involved have agreed not to disclose financial details of the transaction, which is subject to approval by the relevant regulatory authorities in Russia, said Allianz, which expects the deal to close in September.
The Moscow-based ROSNOs clients include large international corporations, Russian companies and individuals. The insurer had gross premiums of $311 million in 2000 and the number of clients grew by nearly 30 percent that year, according to Allianz.
Allianz is acquiring the shares in ROSNO from the Moscow-headquartered financial and industrial holding company Sistema, and from other shareholders. (Allianz said in the release announcing the deal that Sistemas major shareholder is Vladimir Evtuchenkov, the company's chairman.)
Allianz said the investment represents a significant step for its expansion in the Russian market, where it has operated since 1991 with Ost-West-Allianz, a company that specializes in large industrial clients. OWAZ will remain independent and will continue to focus on its niche market, the company said.
"The stake in ROSNO will allow Allianz to participate more significantly in the local corporate clients market and the market for personal lines–especially the growing health insurance and private provision business," Allianz said in a statement.
"The Russian insurance market plays an important and driving role in the CIS and has enormous growth potential. By acting now, we can secure our first-mover advantage in this market," said Michael Diekmann, the Allianz board of management member responsible, among others, for Central and Eastern Europe as well as Asia.
"With ROSNO and Ost-West-Allianz, we aim to position ourselves as a leading insurance group in the personal and corporate lines business in Russia, consistent with our strategy in the rest of Central and Eastern Europe," he continued.
"With this transaction, Sistema brings another significant foreign investor to the Russian market, which is positive for our economy," said Evgenij Novitsky, president of Sistema. "We look forward to working with Allianz to contribute to the development of the insurance sector in Russia."
Allianz said the Russian market has enormous growth potential. "For example, less than 1 percent of the population has a life insurance contract and less than 5 percent owns private health insurance," Allianz said. "While the average annual amount spent on insurance products per person in, for example, Poland and Hungary lies at $107 and $113, respectively, this sum in Russia only amounts to approximately $30."
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 6, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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