French insurer AXA and BNP Paribas, a major French banking group, have reached an agreement for the establishment of a partnership on the Ukrainian P/C insurance market. AXA will acquire from BNP Paribas’ subsidiary UkrSibbank a 50 percent stake in its insurance subsidiary, Ukrainian Insurance Alliance (UIA).
Completion of the transaction is subject to customary regulatory approvals and is expected to take place before year-end 2007.
AXA will take over the management of the joint company, which will benefit from an exclusive bancassurance distribution agreement with UkrSibbank for an initial period of 10 years.
“UIA sells mostly individual motor and property insurance through UkrSibbank’s 1000 branches. In 2006, it more than doubled its revenues compared to the previous year to $35 million,” the announcement noted. “Following this operation, UIA will be well positioned to seize the growth prospects of the Ukrainian market, by combining the strength of UkrSibbank’s network and AXA’s expertise in insurance product development, client service and claims management.”
The bulletin described the Ukrainian insurance industry as “is still very fragmented with top 10 players, including UIA, controlling just above 40 percent of the market.” However both companies see “very strong growth potential, with 47 million inhabitants and a very low penetration rate.” They foresee faster growth through the combination, and also plan to capitalize on their already “profitable partnership’ in the French P/C market.
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