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Insurer Generali merges with ČP

Massive deal targets new ventures in Eastern Europe

By Markéta Hulpachová
Staff Writer, The Prague Post
May 2nd, 2007 issue

The Czech Republic’s largest insurer, Česká pojišťovna (ČP), has agreed to merge with the largest Italian insurer, Generali. The newly formed company, Generali PPF Holding, aims to gain control of the East European insurance market, ČP parent company PPF Financial Group announced April 26.

The merger gives 51 percent ownership to Generali; PPF will own the remaining 49 percent.
“The agreement accelerates both the group’s strategies for expansion in one of the insurance world’s most attractive regions and creates a strong platform for further expansion opportunities in the region and adjacent territories,” PPF announced.
Generali pledged to pay PPF 1.1 billion euros ($1.5 billion/28 billion Kč) upon completion of the deal.
While Generali and ČP expect to strengthen their presence in Eastern markets, ČP says the merger will not alter Czech operations.
“Nothing will change for our clients,” said Václav Bálek, ČP’s spokesman.
Generali PPF Holding announced leadership appointments in general meetings April 24–28. The CEO is ČP Board of Directors Chairman Ladislav Bartoníček. Generali Co-CEO Sirgio Balbinot will be chairman of the joint venture’s board.
Petr Kellner, who owns 95 percent of PPF, will become a board member at Generali. The Generali Group also invited Jiří Šmejc, who co-owns PPF along with Kellner, and Bartoníček to become members of its board.
Forbes magazine lists Kellner as the world’s 119th wealthiest person, with an estimated net worth of 120 billion Kč ($5.8 billion).
By fusing with Generali, PPF says it will gain a stronghold in 12 Central and East European countries, including Poland, the Czech Republic, Russia and Ukraine.
ČP’s management is enthusiastic about the venture.
“We believe this partnership is a perfect commercial, cultural and strategic fit for ČP group. We operate in complementary markets, and the potential for collaboration is compelling,” the company announced.
Generali’s presence in Central Europe dates to 1989, when the company started a venture in Hungary. That made Generali the first Western insurance company to invest in the former Soviet bloc. In 2002, it expanded its East European presence into Croatia.
Seeking a partner for its new stage of development, Generali management says it saw PPF and ČP as a springboard into new markets.
“By joining forces, we become the leading player in Central European expansion with a pool of more than 9 million clients,” Balbinot said. “Combining Generali’s insurance capabilities and financial strengths with the dynamism and deep market knowledge of a local entrepreneur will prove to be a winning combination.”

Markéta Hulpachová can be reached at mhulpachova@praguepost.com


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