17 April 2014 Insurance

PZU acquires RSA’s Eastern European units

Powszechny Zakład Ubezpieczeń sa (PZU), Poland’s largest insurer, has agreed to buy four Eastern European subsidiaries of insurer RSA.

PZU will pay €360 million for Lietuvos Draudimas in Lithuania, AAS Balta in Latvia, the Estonian branch of Codan Forsikring and Link4 Towarzystwo Ubezpieczen Spolka Akcyjna in Poland.

RSA expects the transaction to be completed during the second half of 2014 with transactions expected to add around £200m to the group’s tangible net assets.

At the end of last year, RSA’s operations in the Baltics had total assets of £258 million and net assets of £83 million. Net written premiums in 2013 were £166 million with a pre-tax profit of £13 million.

PZU will pay €270 million for RSA’s Baltic operations and €90 million for Polish insurer Link4.

Stephen Hester, RSA group chief executive, said: “These disposals are in line with our stated aim of focusing the Group’s geographical spread onto its core businesses in the UK & Ireland, Scandinavia, Canada and Latin America, and represent a good deal for our shareholders, customers and employees.

“The total sale proceeds represent significant progress against our overall target of at least £300m of disposal proceeds set for 2014, and also demonstrate the strong underlying value that exists within RSA. We will continue to evaluate further non-core disposals, some of which we expect to occur during 2014.

“In our core businesses, we will continue to target markets and segments where we can sustain leadership positions with customers whilst earning returns in excess of our cost of capital. Our ambition is for RSA to be a resilient and valuable company, performing at its best, and reliably so.”

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