ECONOMY

Aspis Group chief probing merger opportunities

The era of the dominant boss has passed for ever, muses Panayiotis Psomiadis, chairman and chief executive of insurer Aspis Pronia. It is a worthwhile statement by a businessman who, until now, used to make major business decisions, as well as take the responsibility for them, by himself. Also for the first time, the Aspis chairman, when he is talking about expected developments in the sector, does not limit himself to acquisition prospects but directly talks about the need for mergers, which, he estimates, are now inevitable. Such a prospect does not exempt the Aspis Group, which, until recently, used to monopolize market interest with its moves to acquire smaller companies, a strategy that brought the company into fifth place among insurance groups in terms of turnover. The reasoning behind the consolidation, which, according to Psomiadis, will start from the general insurance sub-sector, is the need to boost firms’ capital adequacy in order to get them through the decline in revenue brought on by the bearish capital market, as well as the challenges faced by the insurance sector. The future, as described by Psomiadis, is expected to be difficult for those companies that have not understood that boosting their capital is absolutely essential to their survival, an estimation linked to his remark that dominance by the biggest shareholder is a thing of the past. This admission holds true for the Aspis Group itself, as the group’s growing turnover – set to reach 350 million euros this year – clearly proves Psomiadis’s business strategy. As he remarks, the Aspis Group is ready to consider merger proposals if they are deemed favorable. It is this prospect of mergers that explains the maintenance of three separate companies, each with a separate legal entity, in the forms of Aspis General Insurance Company, Aspis Life Insurance SA and Commercial Value. Insurance companies, says Psomiadis, will be called upon to shoulder the enormous costs of insuring a new generation, marked not only by clients’ greater longevity but also by a greater incidence of disease, a result of this higher longevity. The need to readjust treatment provisions, to draw up modern pension programs and to make correct investment choices will be the key to the survival of insurance companies, which, Psomiadis repeats, must strengthen their capital base through mergers, thus ensuring that the insured receive the benefits set out in their contracts. Psomiadis describes Aspis’s failed attempt to merge with European Reliance as fueled exactly by this rationale. Psomiadis has not lost hope that the two companies will eventually agree on merger terms. A capital raise of 25 million euros, set to be approved by Aspis’s shareholders on Tuesday, is also a step toward strengthening its capital base. According to Psomiadis, a number of businesspeople will take part. Management is also planning an equal increase in equity capital for next year.