Serbian Government expects EUR 100 million from the future DUNAV sale, in case it will decide the company's privatization

The Serbian Government has set the approximate privatization price for DUNAV Osiguranje to EUR 110 million, an article published by the Croatian insurance portal osiguranje.hr reads. Yet, the privatization decision is still pending, as the Government is currently analyzing the results of company's diagnostic review, to determine DUNAV's financial and competitive position before effectively launching the privatization process.

The sum exceeds the expected level, of about EUR 60 million, the discrepancy coming mostly from the different standards of valuation applied. The generally accepted European code of valuation requires considering also other valuation criteria besides the GWP volume, such as the number of employees or other qualitative parameters. In DUNAV Osiguranje's case, the company value may decrease because of its too large number of employees, almost double than the optimal one.

According to local sources, the Government's higher valuation took into consideration the significantly improved profitability achieved by DUNAV in 2015, when the company has reported a profit of RSD 1.1 billion against the loss of RSD 3 billion from 2014.  In the first nine months of this year, net profit amounted to RSD 1.17 billion dinars. Also, the company's assets saw an increase of 10.9%, which in the Serbian Government entitles its higher expectations, to get EUR 100 - 120 million from the market leader's sale.

According to the 3Q2016 results, the state-owned DUNAV Osiguranje remained the country's top insurer by premium income, although it saw its market share narrow by 1 pp y-o-y, to 26.6%.

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