KBC and Kontrakt Sofia reached agreement today for KBC to acquire 70% ownership of DZI Insurance, the market leader in non-life and life insurance in Bulgaria, for 185 million EUR. Following the acquisition, KBC will launch a public bid for the remaining 30%. As part of the deal, KBC will also acquire DZI INVEST, a securities broker active on the Bulgarian Stock Exchange. The deal is subject to approval by the Bulgarian regulatory authorities. KBC intends to finalise the transaction as soon as possible .
For KBC, this deal constitutes a major acquisition in the insurance sector. DZI Insurance will bring KBC additional know-how and experience in the field of insurance, and will also foster synergy throughout KBC's existing Central and Eastern European insurance franchises. KBC has been quick to respond to Bulgaria's entry into the European Union (1 January 2007), becoming the first Belgian investor in the Bulgarian financial sector.
André Bergen, KBC Group CEO, welcomed today's acquisition: 'The Bulgarian market meets KBC's Central and Eastern European expansion criteria. We will be in a position now to take advantage of Bulgaria's economic convergence and potential for further penetration of the banking and especially insurance markets. DZI Insurance is a unique platform for KBC to enter the Bulgarian market, thanks to its leading and longstanding presence in the country and its dense nationwide multichannel distribution network. DZI Insurance is the clear market leader both in non-life and life insurance and a true household name, achieving excellent growth and good profitability. It also provides KBC with a platform to develop bancassurance on the high-growth Bulgarian market. Moreover, with DZI Insurance, KBC will also be much better positioned to take part in the future and further consolidation of the financial sector in Bulgaria.'
Jan Vanhevel, CEO of KBC Group's Central Europe Business Unit, added: 'For KBC group, the acquisition of DZI Insurance is the first major acquisition of an insurance company since the expansion of the European Union in 2004. It will increase the critical mass of insurance in our portfolio of activities and create a better balance between insurance and banking in our Central Europe business unit. We are confident that DZI Insurance will bring us additional know-how and experience in insurance, which will also foster synergy throughout our existing Central and Eastern European insurance franchises.'
Nedyalko Chandarov, Chairman of the Management Board and Executive Director of DZI Insurance, comments on today's announcements as follows: 'Today, we welcome our new shareholder, KBC Group. Given the professionalism, enthusiasm and determination of all our employees, I am convinced that integration within this strong, international financial group will ensure that DZI Insurance maintains and strengthens its position in the league of strong performers in the Bulgarian financial industry in the years to come. We are convinced that DZI Insurance, its employees and customers, will benefit from the know-how and experience of one of the most successful and prominent bancassurance groups in Europe.'
KBC will pay a total consideration equal to 185 million EUR for 70% of the outstanding shares of DZI Insurance. Additionally, approximately 75 million EUR, an amount equal to 70% of the undistributed capital gain proceeds received by DZI Insurance for the sale of their stake in DZI Bank, will be paid by KBC to Kontrakt Sofia.
As part of the deal, KBC will also acquire DZI Invest, a provider of intermediary services on the Bulgarian Stock Exchange. DZI Invest was created in 1999 and provides brokerage services for Bulgarian government bonds and foreign government securities, as well as being active in the issue of securities, market making and portfolio management. DZI Invest is a member of the Bulgarian Stock Exchange.
Bulgaria, a relatively concentrated insurance market with high growth potential
Bulgaria is a mid-sized market in South-East Europe with 7.4 million inhabitants. It has experienced strong economic growth over the past few years (annual GDP growth 2004-2006: + 5.5%) and this growth is expected to continue in the coming years. On January 1st, Bulgaria joined the European Union. Since 1997, its currency, the lev, has been pegged to the euro.
There are 31 insurance companies active in Bulgaria: 3 pure life, 20 pure non-life and 8 composite. The Bulgarian insurance market is dominated by non-bank players and several large foreign and Western European insurance companies. With the top 5 non-life insurers having a 68% market share and the top 5 life insurance players having an 81% share, the Bulgarian market is relatively concentrated. Non-life is dominated by motor insurance, similar to the situation on other Central European insurance markets. Distribution is handled primarily through agents and brokers.
Despite its considerable growth (GWP growth in 2004-2005 for non-life insurance of 25% and for life insurance of 48%), the Bulgarian insurance sector still has significant potential, as the wealth level in Bulgaria is set to increase in the years to come. Although current non-life insurance penetration is only slightly lower than in other CEE countries (but well below the EU-15 average), life insurance penetration is about 20-25% the level of comparable CEE transition economies like Slovakia, the Czech Republic, Poland and Hungary, creating scope for additional catch-up growth in the next few years.
DZI Insurance, market leader in non-life and life insurance
DZI Insurance was created as a state insurer in 1946 and has 60 years of experience, knowledge and understanding of the markets and customers in all insurance segments. DZI Insurance is a well established, respected and widely recognised brand (a true household name) in insurance in Bulgaria. Building upon its longstanding presence and expertise, DZI has managed to maintain its number 1 position on the Bulgarian insurance market both in non-life and life, with market shares of 18% and 26% respectively (figures for the first half of 2006), and this despite the significant presence of international competition, which started in the late nineties.
DZI Insurance has an extensive multi-channel distribution network with true nationwide coverage. The company is present not only in the main urban centres but also in rural areas, with 200 direct sales outlets, more than 9 000 (7 800 non-life and 2 400 life) licensed insurance agents, and a network of 217 brokers.
DZI Insurance, with a market capitalisation of 803 million BGN (or 410 million EUR, as per 26 January 2007, including the proceeds from the sale of DZI Bank) is the sixth largest public company in Bulgaria. DZI Insurance focuses on the retail business, holds strong and stable positions especially in motor insurance (which accounts for 70% of non-life premium income) and has a well diversified life portfolio. The insurer employs 975 FTE and has experienced significant growth (2004-2005 GWP growth of 50% in non-life and 60% in life insurance), with total gross written premiums amounting to 230 million BGN (or 120 million EUR, 80% for the non-life and 20% for the life business, as per 31 December 2005). The company also enjoys healthy profitability (2005 ROE + 24%, with a combined ratio for the non-life business of 93% in 2005).
For more information, please contact:
- Vanya Verbovska, DZI Insurance
Tel. (359) 2 980 00 88, Fax (359) 2 987 69 82 verbovska@dzi.bg
- Luc Cool, Director of Investor Relations, KBC Group
Tel. (32) 2 429 40 51 investor.relations@kbc.com
- Viviane Huybrecht, Head of Group Communication and of the KBC Press Office
Spokesperson, KBC Group Tel. (32) 2 429 85 45 viviane.huybrecht@kbc.be or pressofficekbc@kbc.be
Note to the editor
KBC Group: www.kbc.com KBC group is one of the leading financial groups in Europe. A multi-channel bancassurance group with a geographic focus on Europe, it caters mainly for retail and private banking customers and small and medium-sized enterprises. Besides focusing on providing retail and private bancassurance services, it is also active in asset management, the provision of corporate services and market activities. KBC occupies significant, even leading positions in Belgium and Central and Eastern Europe and has an extensive private banking network operating under the European Private Bankers concept. It has also selectively established a presence in a number of other countries and regions around the world.
Over the past decade, KBC has built up a strong presence in most of the countries that joined the EU on 1 May 2004 (Poland, the Czech Republic, Slovakia and Hungary). KBC's long-term strategic plans include continuing to explore market opportunities in future EU Member States and elsewhere. KBC expects these countries to demonstrate above average growth, reinforced by, amongst other things, the effects of joining the EU.
At the end of December 2006, KBC announced the acquisition of Romstal Leasing, the largest independent leasing company in Romania, and of INK Insurance Broker, the seventh largest insurance broker in Romania. KBC Securities, the broking company of KBC group, acquired Swiss Capital, the second biggest independent broking company in Romania, and Equitas, the leading Hungarian online retail broker. KBC has also announced that it has reached agreement with the main shareholders of A Banka (Belgrade, Serbia) to acquire a majority stake in that institution through a public takeover bid.
KBC Group NV is listed on Euronext Brussels (ticker symbol 'KBC') and the Luxembourg Stock Exchange. With a market capitalisation of around 35 billion euros, KBC is one of the top Belgian companies and one of the leading financial groups in Europe, employing 50 000 staff and catering for 12 million customers.
http://hugin.info/133947/R/1100678/196537.pdf
For KBC, this deal constitutes a major acquisition in the insurance sector. DZI Insurance will bring KBC additional know-how and experience in the field of insurance, and will also foster synergy throughout KBC's existing Central and Eastern European insurance franchises. KBC has been quick to respond to Bulgaria's entry into the European Union (1 January 2007), becoming the first Belgian investor in the Bulgarian financial sector.
André Bergen, KBC Group CEO, welcomed today's acquisition: 'The Bulgarian market meets KBC's Central and Eastern European expansion criteria. We will be in a position now to take advantage of Bulgaria's economic convergence and potential for further penetration of the banking and especially insurance markets. DZI Insurance is a unique platform for KBC to enter the Bulgarian market, thanks to its leading and longstanding presence in the country and its dense nationwide multichannel distribution network. DZI Insurance is the clear market leader both in non-life and life insurance and a true household name, achieving excellent growth and good profitability. It also provides KBC with a platform to develop bancassurance on the high-growth Bulgarian market. Moreover, with DZI Insurance, KBC will also be much better positioned to take part in the future and further consolidation of the financial sector in Bulgaria.'
Jan Vanhevel, CEO of KBC Group's Central Europe Business Unit, added: 'For KBC group, the acquisition of DZI Insurance is the first major acquisition of an insurance company since the expansion of the European Union in 2004. It will increase the critical mass of insurance in our portfolio of activities and create a better balance between insurance and banking in our Central Europe business unit. We are confident that DZI Insurance will bring us additional know-how and experience in insurance, which will also foster synergy throughout our existing Central and Eastern European insurance franchises.'
Nedyalko Chandarov, Chairman of the Management Board and Executive Director of DZI Insurance, comments on today's announcements as follows: 'Today, we welcome our new shareholder, KBC Group. Given the professionalism, enthusiasm and determination of all our employees, I am convinced that integration within this strong, international financial group will ensure that DZI Insurance maintains and strengthens its position in the league of strong performers in the Bulgarian financial industry in the years to come. We are convinced that DZI Insurance, its employees and customers, will benefit from the know-how and experience of one of the most successful and prominent bancassurance groups in Europe.'
KBC will pay a total consideration equal to 185 million EUR for 70% of the outstanding shares of DZI Insurance. Additionally, approximately 75 million EUR, an amount equal to 70% of the undistributed capital gain proceeds received by DZI Insurance for the sale of their stake in DZI Bank, will be paid by KBC to Kontrakt Sofia.
As part of the deal, KBC will also acquire DZI Invest, a provider of intermediary services on the Bulgarian Stock Exchange. DZI Invest was created in 1999 and provides brokerage services for Bulgarian government bonds and foreign government securities, as well as being active in the issue of securities, market making and portfolio management. DZI Invest is a member of the Bulgarian Stock Exchange.
Bulgaria, a relatively concentrated insurance market with high growth potential
Bulgaria is a mid-sized market in South-East Europe with 7.4 million inhabitants. It has experienced strong economic growth over the past few years (annual GDP growth 2004-2006: + 5.5%) and this growth is expected to continue in the coming years. On January 1st, Bulgaria joined the European Union. Since 1997, its currency, the lev, has been pegged to the euro.
There are 31 insurance companies active in Bulgaria: 3 pure life, 20 pure non-life and 8 composite. The Bulgarian insurance market is dominated by non-bank players and several large foreign and Western European insurance companies. With the top 5 non-life insurers having a 68% market share and the top 5 life insurance players having an 81% share, the Bulgarian market is relatively concentrated. Non-life is dominated by motor insurance, similar to the situation on other Central European insurance markets. Distribution is handled primarily through agents and brokers.
Despite its considerable growth (GWP growth in 2004-2005 for non-life insurance of 25% and for life insurance of 48%), the Bulgarian insurance sector still has significant potential, as the wealth level in Bulgaria is set to increase in the years to come. Although current non-life insurance penetration is only slightly lower than in other CEE countries (but well below the EU-15 average), life insurance penetration is about 20-25% the level of comparable CEE transition economies like Slovakia, the Czech Republic, Poland and Hungary, creating scope for additional catch-up growth in the next few years.
DZI Insurance, market leader in non-life and life insurance
DZI Insurance was created as a state insurer in 1946 and has 60 years of experience, knowledge and understanding of the markets and customers in all insurance segments. DZI Insurance is a well established, respected and widely recognised brand (a true household name) in insurance in Bulgaria. Building upon its longstanding presence and expertise, DZI has managed to maintain its number 1 position on the Bulgarian insurance market both in non-life and life, with market shares of 18% and 26% respectively (figures for the first half of 2006), and this despite the significant presence of international competition, which started in the late nineties.
DZI Insurance has an extensive multi-channel distribution network with true nationwide coverage. The company is present not only in the main urban centres but also in rural areas, with 200 direct sales outlets, more than 9 000 (7 800 non-life and 2 400 life) licensed insurance agents, and a network of 217 brokers.
DZI Insurance, with a market capitalisation of 803 million BGN (or 410 million EUR, as per 26 January 2007, including the proceeds from the sale of DZI Bank) is the sixth largest public company in Bulgaria. DZI Insurance focuses on the retail business, holds strong and stable positions especially in motor insurance (which accounts for 70% of non-life premium income) and has a well diversified life portfolio. The insurer employs 975 FTE and has experienced significant growth (2004-2005 GWP growth of 50% in non-life and 60% in life insurance), with total gross written premiums amounting to 230 million BGN (or 120 million EUR, 80% for the non-life and 20% for the life business, as per 31 December 2005). The company also enjoys healthy profitability (2005 ROE + 24%, with a combined ratio for the non-life business of 93% in 2005).
For more information, please contact:
- Vanya Verbovska, DZI Insurance
Tel. (359) 2 980 00 88, Fax (359) 2 987 69 82 verbovska@dzi.bg
- Luc Cool, Director of Investor Relations, KBC Group
Tel. (32) 2 429 40 51 investor.relations@kbc.com
- Viviane Huybrecht, Head of Group Communication and of the KBC Press Office
Spokesperson, KBC Group Tel. (32) 2 429 85 45 viviane.huybrecht@kbc.be or pressofficekbc@kbc.be
Note to the editor
KBC Group: www.kbc.com KBC group is one of the leading financial groups in Europe. A multi-channel bancassurance group with a geographic focus on Europe, it caters mainly for retail and private banking customers and small and medium-sized enterprises. Besides focusing on providing retail and private bancassurance services, it is also active in asset management, the provision of corporate services and market activities. KBC occupies significant, even leading positions in Belgium and Central and Eastern Europe and has an extensive private banking network operating under the European Private Bankers concept. It has also selectively established a presence in a number of other countries and regions around the world.
Over the past decade, KBC has built up a strong presence in most of the countries that joined the EU on 1 May 2004 (Poland, the Czech Republic, Slovakia and Hungary). KBC's long-term strategic plans include continuing to explore market opportunities in future EU Member States and elsewhere. KBC expects these countries to demonstrate above average growth, reinforced by, amongst other things, the effects of joining the EU.
At the end of December 2006, KBC announced the acquisition of Romstal Leasing, the largest independent leasing company in Romania, and of INK Insurance Broker, the seventh largest insurance broker in Romania. KBC Securities, the broking company of KBC group, acquired Swiss Capital, the second biggest independent broking company in Romania, and Equitas, the leading Hungarian online retail broker. KBC has also announced that it has reached agreement with the main shareholders of A Banka (Belgrade, Serbia) to acquire a majority stake in that institution through a public takeover bid.
KBC Group NV is listed on Euronext Brussels (ticker symbol 'KBC') and the Luxembourg Stock Exchange. With a market capitalisation of around 35 billion euros, KBC is one of the top Belgian companies and one of the leading financial groups in Europe, employing 50 000 staff and catering for 12 million customers.
http://hugin.info/133947/R/1100678/196537.pdf
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