Interamerican posts 23.6-million first-half loss, tries restructuring
First-half losses for Greece’s biggest insurance firm Interamerican render the success of its restructuring plan essential for the turnaround in the company’s fortunes after the publication of results by the parent Eureko group. The Dutch-based group announced that Interamerican suffered losses of 23.6 million euros in January-June 2005, which it attributes to the 60-million-euro increase in provisions the group was forced to make due to low interest rates, and to adjustments made to its health cover policies. The restructuring plan provides for a drastic cut in expenses through network reorganization initiatives, while another aspect foresees the establishment of a holding company to monitor more rationally each company’s contribution to the group’s results. Within this context, Imperio, one of the group’s subsidiaries, is about to absorb the portfolio of Interamerican Life. This will be followed by the transformation of Interamerican into a holding company, with Imperio being renamed «Interamerican.» The relevant applications have been submitted to the Development Ministry and the deadline for any challenges was to expire yesterday. According to sources, the process of establishing a holding company will be completed by the end of the year, but may require additional time as challenges were expected right on the deadline. Market observers associate these challenges with business interests and possibly with the ongoing court battle between former Interamerican chief Dimitris Kontominas and media proprietor Giorgos Kouris. The word in the market also talks of a possible return of Kontominas and his buying Interamerican back. Yet less volatile observers dismiss this, especially as Eureko has invested large funds into the insurance company and is naturally expected to aim at returns on its investment and not to depart amid losses. This is also supported by the general moves by the owner that are in full swing even in mid-August. The most significant of these moves is the merging of insurance offices so that the 60 sales points are cut in half in an effort to rein in expenses. Equally important for cutting costs is the voluntary redundancy program planned by the group, through which administrative staff is expected to drop by at least 200-250 people from about 1,500. These moves create plenty of worries as they coincide with the decline in sales and insurance transactions, putting into question the future of Greece’s biggest private insurance company.