Piraeus Financial Holdings Enters Exclusive Talks for Ethniki Insurance Acquisition

Piraeus Financial Holdings Engages in Talks for Ethniki Insurance Acquisition

Piraeus Financial Holdings has recently announced its intent to engage in exclusive discussions with CVC Capital Partners regarding the acquisition of a significant stake in Ethniki Insurance. This potential transaction, reported to involve a 70% stake valued at approximately €469 million, marks a pivotal move for Piraeus as it aims to bolster its market position and revenue streams.

This decision comes in the wake of a previous announcement detailing the company's strategic direction. With expectations of diversifying revenue and generating notable shareholder value, Piraeus sees the acquisition as a step forward in solidifying its presence within the insurance sector.

Following the completion of this potential transaction, which is estimated to have a pro forma impact on the capital ratio of around 150 basis points as of September 2024, the company anticipates a capital position that would exceed the necessary buffers by over 200 basis points.
Additionally, Piraeus is exploring the adoption of the Danish Compromise approach for capital treatment related to this acquisition. Should this be approved, it could significantly lower the capital impact of the transaction to below 100 basis points.

Ethniki Insurance: A Market Leader

Ethniki Insurance stands as Greece’s foremost composite insurer, exhibiting a market share of approximately 14%. The company offers a comprehensive range of insurance products, with a noteworthy contribution of 17% from life insurance and 11% from non-life insurance. According to the 2023 report, Ethniki Insurance has recorded gross written premiums totaling €0.8 billion and boasts total assets amounting to €4 billion alongside shareholders' equity of €0.4 billion.

Profits before tax, adjusted to exclude non-recurring items, reached an impressive €100 million in 2023. Ethniki’s extensive production network comprises around 130 sales offices, more than 1,600 corporate insurance agents, 1,100 collaborating insurance agencies, and around 135 brokers, supported by a network of six branches.

Advisory and Future Steps

In navigating the complexities of this acquisition, Piraeus has enlisted the assistance of several reputable firms. UBS Europe SE serves as the exclusive financial advisor, while Milliman provides actuarial insights. Legal guidance is drawn from both Milbank LLP and Moratis Passas Law Firm for international and local matters, respectively.

Piraeus Financial Holdings emphasizes its commitment to transparency and will promptly communicate any significant developments to the investment community as per regulatory requirements.

Caution on Forward-Looking Statements

While Piraeus is optimistic about the prospective benefits this acquisition may bring, it is crucial to acknowledge that forward-looking statements are inherently subject to risks and uncertainties. Factors such as regulatory approvals, market conditions, and operational challenges could affect actual outcomes, diverging from the company's expectations. Therefore, interested parties are urged to exercise caution in their interpretations.

As Piraeus pursues this transformative venture, the anticipation within the industry grows, promising a period of notable developments in Greece’s financial landscape.