Eureko Announces Acquisition in Russia

12/09/2008 08:30

Eureko

Eureko Announces Acquisition in Russia of Oranta Insurance Company from PromSvyazCapital (PSC)

Zeist, The Netherlands, 12 September 2008 - Eureko B.V. and Russia's PromSvyazCapital Group (PSC) have today announced that they have signed an agreement whereby Eureko is to acquire 100% of PSC's insurance businesses, LLC Insurance Company Oranta, and CJSC Insurance Company Oranta-M - collectively known as 'Oranta', whereby Completion is subject to the fulfilment of some conditions, such as receipt of regulatory approvals.

The acquisition is a timely opportunity that fits perfectly within Eureko's strategic and geographical development objectives, providing an early, accelerated entry into the dynamic Russian market and confirming its CEE ambitions.

Oranta, ranking number23 by Gross Written premiums (GWP) in 2007 (number17 by GWP in MOD business line), is a fast-growing company, which more than doubled GWP in 2007. It has a multi-channel, nationwide distribution network, with principal operations in Moscow and St Petersburg, and a presence in most major cities. Its main business focus is on motor insurance, allowing Eureko to leverage its core competence in terms of claims handling. Property insurance is a profitable secondary business line, with major growth potential.

Russia is one of the largest, most dynamic emerging economies, with real GDP growth of more than 50% since 2000. Consolidation in the insurance sector is accelerating, leading to increased market share among the leading players. These, and other factors, make Russia a country which presents an excellent platform from which to further develop Eureko's strategic ambitions, and to leverage and build on its core competences.

Eureko is a leading European insurer, based in The Netherlands, where it is the market leader, with operations in 11 other countries. It aims to expand its geographical presence beyond the developed markets of Western Europe, to the developing markets of Central/Eastern Europe (where it already has sizeable operations), the Balkans, and Russia. In 2007, Eureko acquired a leading insurer in Turkey.

Eureko has international leadership positions in bancassurance, brokers, agents and direct-writing distribution channels, and provides a full range of Life, Non-Life, and Health insurance products. It believes strongly in the value of distribution, and puts the customer at its core.

"PromSvyazCapital" Group is a diversified conglomerate with investments in various sectors of the Russian economy. The Group operates as a private equity fund. Key strategic industry groups of "PromSvyazCapital" Group are the following: financial services, media, real estate and development, system integration. Industrial machinery and communication are also represented in group's investment portfolio.

Commenting on the deal, Eureko Board member responsible for international operations, Thomas van Rijckevorsel said, "I am delighted that we have signed this agreement. Oranta fits well with Eureko's growth objectives. The potential offered by this transaction will go some way to fulfilling our strategic ambitions. Despite the on-going global financial difficulties, Eureko aims to be consistent in its execution of its stated international growth strategy, and this new transaction underscores our commitment to that strategy."

On behalf of the sellers Pavel Khokhryakov, President and CEO of PromSvyazCapital Group commented, "The business model of PromSvyazCapital Group is to acquire enterprises and establish new ventures in industries, where we can create significant shareholder returns in 3-5 years through application of cutting-edge strategic, managerial and technological expertise. We sell an asset, when we ourselves have achieved the most value creation within the Group. We invest sale proceeds in new or existing ventures of the Group that are continuing to exhibit strong growth potential, available to be realized by the Group. Oranta is one of our financial services companies, all of which were created from scratch. Eureko's proposal coincided with the right timing for us to sell Oranta. Our analysis forecasts that Oranta's development will be expedited significantly after integration with Eureko, as opposed to a slower Oranta's expansion if the company is retained within PromSvyazCapital. Therefore, we are confident, that the signed deal is in the best interest of all parties, Eureko, PromSvyazCapital, Oranta's customers and employees."

The transaction is subject to regulatory approval in Russia, and is expected to complete at the end of November 2008.

Ends

Zeist 12-9-2008





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