France’s Groupama buys Phoenix

Listed insurance firm Phoenix Metrolife, a subsidiary of Emporiki Bank, will be acquired by French insurance group Groupama International, as Emporiki and its parent company, Credit Agricole, agreed yesterday. Groupama was chosen ahead of Germany’s Ergo and local Aspis group. «The acquisition forms part of the international expansion strategy aimed at capturing the top spot in the markets of Southern Europe,» Groupama said in a statement. The completion of the deal for 100 percent of the shares is the second major investment in the local insurance sector after the sale of Alpha Insurance to French group AXA, signifying the entry of a major financial group into the local insurance market. Groupama is the biggest general insurance company in France and among the top five in life and health insurance. It has 8 million customers in eight countries (including the UK, Spain, Italy and Hungary) and last year it proceeded to the acquisition of Basak insurance group in Turkey. The price has not been set yet as it will emerge from the negotiations ahead and the terms and conditions to be agreed on. However, sources suggest it will come to -100 million, not including any reductions due to additional bad loans and court decisions that burden Phoenix. A key element in the agreement is the provision that Emporiki and Phoenix will continue to cooperate for the distribution of certain general insurance products. «The aim of this transaction is the focus on the development of bancassurances through the existing network of the bank,» the statement reads. This clause will allow Phoenix to access the broad network of Emporiki, although Groupama is a main shareholder of Societe Generale, active in Greece through Geniki Bank. The buyout comes just as Phoenix had begun rebounding from a long period of losses after the merging with Metrolife and the adjustment to the international financial reporting standards. It will close 2006 with profits of -600,000, not including -15.2 million allocated for the improvement of its net worth and the increase of share capital. Next week its 490-strong employee union will meet with Deputy Employment Minister Gerasimos Giakoumatos and ask that no job is lost. In the last two years Phoenix’s network has been streamlined, centralizing risk-undertaking and collection procedures. This brought about the reduction of operating expenses from -59 million in 2005 to -40 million last year.