Making its first move into Russia, Axa has paid €810 million
($1.16 billion) to acquire a 36.7 percent stake in Reso Garantia
(Reso), a general insurer boasting Russia’s second-largest agent
network. Also in Axa’s sights is an entry into the Russian life
insurance and savings market via a joint venture (JV) to be formed
with Reso’s shareholders.
“This strategic investment is an excellent opportunity for Axa
to enter the Russian insurance market, which offers strong growth
prospects and a favourable business environment,” said Henri de
Castries, chairman of Axa’s management board. The French insurer
has the right to acquire the remaining 63.3 percent of Reso via
options exercisable in 2010 and 2011.
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Established in 1991, Reso focuses on vehicle damage and compulsory
vehicle third-party liability insurance, and has a 7 percent share
of the Russian general insurance market. Distribution is via 18,000
tied agents in 82 of the Russian Federation’s 89 regions and Reso’s
546 branches staffed by 6,000 employees. Reso, which has about 3
million retail and corporate clients, reported revenue of €446
million and net income of €41 million in the first half of
2007.
Reso’s current shareholding structure comprises its founders,
brothers Sergei and Nikolai Sarkisov, who control about 85 percent
of Reso via Reso Group, a holding company that also has interests
in medical services, leasing, development and asset
management.
About 5 percent of Reso’s shares are held by its management and 10
percent by development financing organisation the European Bank for
Reconstruction and Development (EBRD). The EBRD acquired its stake
in May 2007 for €150 million, ahead of a planned initial public
offering by Reso that was later abandoned.
Under the terms of the agreement, existing Reso shareholders will
sell a stake to Axa proportionate to their holding and, in
addition, Axa will grant a six-year $1 billion credit facility to
Reso’s main shareholder, fully secured by its shareholding in the
company. The agreement also calls for Reso’s current management
team to continue to run the company, though Axa will have
management control of the life JV.
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By GlobalDataAccording to reinsurer Swiss Re, in 2006 the total Russian
insurance market generated premium income of $21.5 billion, of
which life insurance comprised only $571 million. Average life
insurance premiums per capita was $4 while market penetration was
0.1 percent of GDP.
