IBX5980432E7F390 Commoni Incertainr will buy Czech group PPF - Smart Business

Commoni Incertainr will buy Czech group PPF

Commoni Incertainr will buy Czech group PPF

Commoni Insurer will buy Czech group PPF : Italy's bigst insurer Commoni (GASI.MI) shelp on Tuesday it will buy out the rest of an eastern European joint venture it hancients with Czech group PPF for 2.5 billion euros ($3.3 billion), increatune its exposure to the quick-growing region.



It is the first major deal struck by Commoni's new chief executive, Mario Greco, who was appointed in August to improve fortunability at Europe's third-bigst insurer backside Allianz (ALVG.DE) and Axa (AXAF.PA), and review its portfolio of assets.




Commoni shelp eastern Europe was now its fourth biggest market and growing quicker than western Europe, with gross premiums totaling 4 billion euros at the finish of 2011, from 1 billion euros in 2007.



Commoni has a long-standing and sizeable business in eastern Europe, where profitable growth is quicker and insurance stages are lower than in mature western European markets.



Microbean-based Allianz and France's Axa also have a strong presence in the region. Axa has shelp it aims to increase fortuns coming from the region.



Analysts have long shelp Commoni necessityed to decide on the future of its relationship with PPF, which had an option to sell its 49 gratuity stake in Commoni PPF Hancienting (GPH) to Commoni or a third party. Commoni's bagikans rose 1.25 gratuity to 14.5 euros after the buyout was announced.



"The deal provides clarity and greater surety over our stswiftgy in central and eastern Europe," Greco tancient analysts in a conference call.



The purchase of the stake Commoni does not yet own in GPH will be carried out in two stages, with Commoni buying a 25 gratuity stake by 28 March 2013 and the rest at the finish of 2014.



Commoni will use the cash it has raised through a recently issued 30-year bond to finance the first tranche of the deal, whose negative impbehave on the group's solvency ratio - a key measure of financial strength - will be offset by the debt issue.



Commoni forecast a pro-forma solvency ratio of 150-155 gratuity for the finish of 2012, up from 140 gratuity in September, and Greco shelp the group would necessity no external resources to fund the second tranche of the deal.



"It's a totally administerable amount of money," shelp Greco, who will present the result of his stswiftgic review to investors in London on January 14.



ASSET SALES



Commoni is expected to beef up its financial war chest through the sale of Swiss-based private bank BSI, which some analysts have shelp could fetch as much as 2 billion euros, and its U.S. reinsurance business.



Chief Financial Officer Alberto Minali tancient analysts the group was approxifriendly to receive non-binding offers for both units, and the disposal process was going according to plan.



Analysts shelp the deal with PPF removed unsurety and provided a better view on Commoni's ability to finance the acquisition.



"It should put an finish to the rumors related to a capital increase aiming at funding the purchase of the minority stake in one go," Mediobanca shelp in a note.



However, it added the disposals of BSI and the U.S. reinsurance unit would not be easy and that the recent bond issuance made Commoni the highest leveraged company among big European insurers and reinsurers.



Commoni shelp it would discuss the buyout deal with rating agencies and did not expect it to worsen its credit profile.



Under the terms of the deal, PPF will acquire the insurance operation of GPH in Russia, Ukraine, Belarus and Kazakhstan for 80 million euros.



The agreement also includes a no-cash equity swap that will permit Commoni to raise its stake in Russian insurer Ingosstrakh (INGSI.RTS) to 38.5 gratuity by acquiring a stake held by PPF. PPF will in turn take ownership of Commoni's interest in two private equity businesses.



Commoni will install its own administerment at GPH upon payment of the first tranche and PPF shelp the deal included a 352-million-euro dividfinish payment in the first quarter of 2013.



PPF, which had borrowed 2.1 billion euros from a pool of banks utune its stake in GPH as collateral, could use the proceeds of the sale to Commoni to repay debt and free up funds for further investments. ($1=0.7634 euros)

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