POLAND: Third Polish insurer, TU EUROPA for sale, rumors say

9 September 2011 — Daniela GHETU
GETIN Holding SA, the Polish financial-services group run by billionaire Leszek CZARNECKI, is exploring a sale of insurer TU EUROPA SA, said people familiar with the process, quoted by Bloomberg. According to the same sources, who declined to be identified as talks are private, JPMorgan Chase & Co. is advising on a possible sale. The market value of the insurer, which is 66.5% owned by GETIN, is about PLN 1.52 billion (EUR 380 million). No official statements are available at the moment.

According to the Polish financial press, if CZARNECKI decides to sell GETIN Holding's entire 66.5% stake in TU EUROPA, the buyer will have to call for 100% of TU EUROPA shares and offer the price of PLN 191, the average price from the last six months as of September 2, while the insurer's current price stands at PLN 161. "TU EUROPA will probably be bought by some other insurer rather than a financial investor, and the price to be paid will be strongly influenced by the attractive distribution contract with Getin Noble Bank included in the sale offer", UniCredit CAIB brokerage analyst Pawel KOZUB told the Polish daily Parkiet.

TU EUROPA group of insurance companies (non-life insurer EUROPA and life insurer EUROPA Zycie) is Poland's third biggest insurer by gross premiums written, selling mortgage, life and travel insurance through more than 30 banking partners and 850 travel agencies, according to the company website. Eleven out of fifteen largest banks in Poland work with the Group.

EUROPA Group of Insurance Companies closed the first six months of 2011 with very good results, by improving its net profit by 20 per cent, to PLN 84m (~EUR 21 million). The two companies of the group wrote in 1H a total of close to PLN 360 million in gross premiums (in accordance with IAS), on PLN 338 million in the corresponding period of last year.

"We have been consistently diversifying our product portfolio and expanding our distribution channels. The above efforts bring a steady improvement of financial results. We have also been consistently implementing our strategy of reducing the sales of high-volume insurance (e.g. saving insurance policies) and increasing the share of products with lower premiums but higher profitability. The above strategy has for many years enabled us to be the leader of the Polish bancassurance market," said Jacek Podoba, President of the Board of TU EUROPA SA and TU na ?ycie EUROPA SA.

During the first two quarters of 2011 the non-life insurer wrote in excess of PLN 248 million (in accordance with IAS) in gross premiums, more than PLN 8.7 million than the first half of 2010. The company's net profit exceeded PLN 43 million, up by 26% on the corresponding period last year. The life insurance company increased its gross premiums written to PLN 111 million (in accordance with IAS), up by 13% in the corresponding period of 2010 (PLN 98 million in accordance with IAS). In the first half of 2011 it one more time improved its net profit to more than PLN 41 million, from PLN 36 million in the corresponding period of 2010.

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