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Vienna Insurance Group

euro adhoc: Vienna Insurance Group
Mergers - Acquisitions - Takeovers
Vienna Insurance Group acquires all Insurance Operations from Erste Bank (1) Long-term partnership with Erste Bank in Austria and CEE (1) Creating the leading insurance ...

  Disclosure announcement transmitted by euro adhoc. The issuer is responsible
  for the content of this announcement.
Not for distribution in the United States, Canada, Japan and 
Please note: this is a translation; only the German version of this 
release is legally binding
Vienna Insurance Group has entered into an agreement with Erste Bank 
to  acquire all of Erste Bank's insurance activities including its  
operations  in  Austria, Czech Republic, Slovakia, Hungary, Croatia 
and Romania for a cash  consideration of  approximately  EUR  1.4bn. 
As  part  of  the   transaction,   a   long-term distribution 
agreement has been entered  into,  giving  Vienna  Insurance  Group 
access to Erste  Bank's  extensive  distribution  network  with  more
than  16m clients and more than 2,900 branches.
Vienna Insurance Group CEO Günter Geyer notes: "With this acquisition
and  long- term  cooperation,  Vienna  Insurance  Group  takes  
advantage   of   a   unique opportunity to further implement its 
strategy for sustained growth in CEE.  This transaction makes us  the
No.  1  insurance  company  among  the  international insurers 
operating in CEE and, importantly, we also become a leading  player  
in the life insurance segment, which we see as our future growth 
engine in  Austria and CEE. Two financial groups with extensive  
financial  services  know-how  are joining forces in this region to 
build a lasting  partnership  with  substantial benefits for 
customers, employees and shareholders alike."
Both the acquisition and  the  long-term  agreement  are  subject  to
customary regulatory and anti-trust authority approvals. Closing  of 
the  transaction  is expected in the third quarter of 2008.
Transaction Overview
Erste Bank's insurance activities consist of two main entities:  s  
Versicherung Group with operations in Austria, Czech Republic, 
Slovakia, Hungary and  Croatia and BCR Asigurari  Group  with  
operations  in  Romania.  s  Versicherung  Group comprises primarily 
life insurance activities, whereas BCR Asigurari  Group  has 
significant presence in both life and non-life insurance. The  Vienna
Insurance Group already has small minority stakes in s Versicherung 
and  s  Versicherung's subsidiaries through its subsidiary Donau  
Versicherung  (3).  Post-transaction, Vienna  Insurance  Group  will 
own  about  95%  in   s Versicherung   and   its subsidiaries with 
the remaining 5% of the life  insurance  operations  owned  by Erste 
Bank and its subsidiaries. With regard  to  BCR  Asigurari  Group,  
Vienna Insurance Group will acquire an  88.5%  ownership  from  Erste
Bank,  with  the remainder owned by existing  minority  shareholders.
Overall,  the  transaction adds almost EUR 1.3bn based on gross  
written  premiums  for fiscal year 2007 to  Vienna  Insurance  Group 
-  predominantly  in  the  life insurance segment.
Vienna Insurance Group and Erste Bank have also concluded a  15  year
preferred mutual distribution partnership, in all countries in which 
the  two  groups  are present. This currently includes Austria, 
Croatia, Romania, the Czech  Republic, Serbia, Slovakia, Ukraine  and
Hungary.  The  distribution  agreement  will  be automatically 
renewed for an additional 10 years, unless terminated  by  one  of 
the parties 12 months prior to the initial expiration date.
Transaction rationale
The  Vienna  Insurance  Group  believes  the  transaction  offers  an
excellent opportunity to substantially reinforce  its  presence  in  
CEE  with  compelling benefits for all stake holders:
  • Creates No. 1 international insurance group in CEE
  • Long-term agreement with preferred access to Erste Bank's strong retail distribution platform with more than 16m clients and more than 2,900 branches - the bancassurance channel is poised to become the most important distribution channel for life insurance policies and with its extensive bancassurance experience, Vienna Insurance Group believes it is ideally positioned to develop products and services tailored to this channel. As part of this long-term sales and distribution agreement, the partners' products will be offered to clients of both Vienna Insurance Group and Erste Bank
  • Significant strengthening of Vienna Insurance Group's life insurance platform via both the acquisition of the life insurance operations and also the access to the bank distribution of Erste Bank. This enables Vienna Insurance Group to capitalise on the attractive growth prospects in the CEE life insurance markets, driven by strong economic growth, rapidly increasing life insurance penetration levels and pension reforms in the region
  • Substantial synergy potential resulting from extended product offering for the distribution channels with considerable cross-selling potential between Vienna Insurance Group and Erste Bank
Vienna Insurance Group believes  the  existing  relationship  with  
Erste  Bank, similar corporate culture and both  parties'  extensive 
transaction  experience will ensure a smooth  execution  of  the  
transaction  and  integration  of  the acquired entities.
Capital raising to fund transaction and further growth in the CEE 
The Vienna Insurance Group strives to have excellent capital  
resources  at  its disposal at all times. In order to fund the 
transaction as well  as  to  further expand its growth in CEE and, 
especially, to  finance  further  acquisitions  in Poland, the 
Ukraine and Hungary, the Vienna Insurance Group plans  to  raise  in 
total EUR 1.2-1.4bn. The Vienna Insurance Group intends to  raise  
approximately EUR 0.9 billion to  approximately EUR 1.0 billion by 
way of a rights issue  with the remainder being raised in  the  
hybrid  capital  market.  Wiener  Städtische Wechselseitige 
Versicherungsanstalt-Vermögensverwaltung,  the  main  shareholder of 
Vienna Insurance Group with about 70%, has informed  Vienna  
Insurance  Group that it will fully support the capital increase and 
that it intends to  maintain
approximately the same percentage of ownership in Vienna Insurance  Group  after
the capital increase. The financing has been designed  to  maintain  the  strong
capitalisation  and  financial  position  of  Vienna   Insurance   Group   post-
The exact timing and further details of the rights issue and hybrid  debt  issue
will be announced at a later stage.
(1) Pending official approval by the relevant authorities
(2) CEE region defined as: Bulgaria, Croatia, Poland, Romania, Serbia,
Slovakia, Czech Republic and Hungary
(3) Donau Versicherung owns 10% in s Versicherung in Austria 
directly, and 4.5% in Pojišt´ovna Ceské sporitelny in Czech Republic,
3.3% in Poistovna Slovenskej sporitelne in Slovakia, 9.0% in ERSTE 
Sparkassen Biztosító Zártkörüen Müködö Részvénytársaság in Hungary 
and 7.4% in Erste Sparkassen osiguranje d.d. za životno osiguranje in
Croatia indirectly.
This information constitutes neither an offer to sell nor a 
solicitation to  buy any securities of Wiener  Städtische  
Versicherung  AG  Vienna  Insurance  Group ("VIG"). A public offer 
would only be made in Austria or in the  Czech  Republic after 
publication of a prospectus prepared in accordance with the 
provisions  of the  Austrian  Capital  Market  Act  or  the  Czech  
Capital  Markets  Act.  Any securities orders received prior to the 
commencement of a public offer  will  be rejected. If a public offer 
is made in Austria  or  in  the  Czech  Republic,  a prospectus 
prepared in accordance with the Austrian Capital Market  Act  or  the
Czech Capital Markets Act will be  published  and  will  be  
available  free  of charge (i) at the seat of Wiener Städtische  
Versicherung  AG  Vienna  Insurance Group, Schottenring 30, 1010 
Vienna, during usual business hours, and,  (ii)  in case of the 
offering in the Czech Republic, the  prospectus  will  be  available 
also on Vienna Insurance Group's internet pages and on internet  pages  of  
participating securities brokers.
This  press  release  and  the  information  contained  herein   are 
not   for distribution  in  or  into  the  United  States  of  
America  and  must  not  be distributed to U.S. persons (as defined 
in Regulation S of the  U.S.  Securities Act of 1933, as amended 
("Securities Act")) or to publications  with  a  general circulation 
in the United States. This press  release  does  not  constitute  an 
offer to sell or a solicitation of an offer to purchase any  
securities  in  the United States. The securities of Vienna Insurance
Group have not been  and  will not be registered under the Securities
Act and  may  not  be  offered,  sold  or delivered within the United
States or to U.S. persons absent registration  under or an applicable
exemption from the registration requirements of the  Securities Act. 
There will be no public offer of securities of Vienna  Insurance  
Group  in the United States.
This press release is directed only to persons (i) who are  outside  
the  United Kingdom or  (ii)  who  have  professional  experience  in
matters  relating  to investments falling within Article 19(5) of the
Financial Services  and  Markets Act 2000 (Financial Promotion) Order
2001 (as amended) (the  "Order")  or  (iii) who  fall  within  
Article  49(2)(a)  to  (d)  ("high   net   worth   companies, 
unincorporated associations, etc.") of the  Order  (all  such  
persons  together being referred to as "Relevant Persons"). Any  
person  who  is  not  a  Relevant Person must not act or rely on this
communication or any of  its  contents.  Any investment or  
investment  activity  to  which  this  communication  relates  is 
available only to relevant persons and will be engaged  in  only  
with  Relevant Persons.
This press release contains forward-looking statements based  on  the
currently held beliefs and assumptions of the management of Vienna 
Insurance Group,  which are  expressed  in  good  faith  and,  in  
their  opinion,  reasonable.    These statements may be identified by
words such  as  "expectation"  or  "target"  and similar expressions,
or by their context.   Forward-looking  statements  involve known and
unknown risks, uncertainties and other factors, which  may  cause  
the actual results, financial condition,  performance,  or  
achievements  of  Vienna Insurance Group, or results of  the  
insurance  industry  generally,  to  differ materially from the 
results, financial condition,  performance  or  achievements express 
or implied by  such  forward-looking  statements.   Given  these  
risks, uncertainties and other factors, recipients of this press 
release are  cautioned not  to  place  undue  reliance  on  these  
forward-looking  statements.  Vienna Insurance  Group  disclaims  any
obligation  to  update  these  forward-looking statements to reflect 
future events or developments.
end of announcement                               euro adhoc


Vienna Insurance Group
Barbara Hagen-Grötschnig, MBA
Corporate Communications
Schottenring 30, 1010 Vienna
Tel.: +43 (0)50 350-21027
Fax: +43 (0)50 350 99-21027

Branche: Insurance
ISIN: AT0000908504
Index: WBI, ATX Prime, ATX
Börsen: Prague Stock Exchange / stock market
Wiener Börse AG / official market