R&SA Inks New Eastern Europe Deal
The UK’s Royal & Sun Alliance Insurance Group has signed an agreement to acquire 50 percent of GD II – Global Direct Insurance Investments B.V. (GDI), a joint venture with Direct Insurance Financial Investments Ltd. (DIFI), “to access the fast growing Eastern European and Russian insurance markets.”
R&SA described the move as “consistent with the Group’s emerging markets’ strategy and will accelerate delivery of a direct personal lines proposition in the region.”
As previously announced, R&SA will pay £44 million ($87.6 million) in cash for a 50 percent shareholding together with a further £44 million to fund future growth; £16 million ($31.8 million) of which “will be contributed at completion for working capital requirements.”
The deal is subject to a number of conditions including obtaining DIFI shareholder approval and regulatory consents.
“GDI’s main operation is Link4, Poland’s leading direct motor insurer,” said R&SA’s bulletin. “Since it was established in 2003, Link4 has grown rapidly, writing motor and household business by phone and internet. In 2006, Link4’s net written premiums increased by 42 percent to £30 million [$59.7 million].
“The joint venture intends to replicate this successful Polish direct model in other attractive markets in the region. GDI recently launched DIRECT Pojistovna, a direct insurance operation in the Czech Republic and expects to start writing direct business in Russia in 2008.”
Paul Whittaker, Emerging Markets CEO commented: “Across Emerging Markets there are exciting opportunities for profitable growth and we have already established strong positions in Asia and Middle East, Latin America and the Baltics. This joint venture gives us a strong platform to lead the development of the Eastern European direct market. Link4 has built real momentum in Poland and we will look to replicate this successful model in the Czech Republic and Russia.”
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