Márton Nagy’s ministry made a big announcement regarding two Hungarian insurance companies

By RockedBuzz 10 Min Read

45% – 35% = 10%

Corvinus International Investments Zrt., which is 100% owned by the Hungarian State, and the Vienna Insurance Group (VIG) insurance group have signed an settlement on the discount of the minority state possession of the Hungarian VIG companies from 45 p.c to 10 p.c, GFM introduced.

The Hungarian State, as a minority proprietor of the market-leading Hungarian holding that features Alfa Biztosító and Union Biztosító, continues to help the event of the insurance sector as a sector of strategic significance and the additional enhance of its competitiveness and efficiency, they added, with out elaborating on precisely what they imply.

On March 25, 2022, Corvinus Zrt. acquired a 45 p.c minority stake within the Hungarian enterprise of the VIG group, in line with the cooperation settlement concluded on this connection, the controlling majority and operational administration rights remained with the VIG group, which can also be listed on the Vienna and partly the Budapest inventory exchanges. . With the deal simply introduced

The Austrian main proprietor buys again a block of shares representing a 35 p.c possession share from the Hungarian State. The closing of the transaction is topic to the permission of the Magyar Nemzeti Bank

they added.

Over the previous 12 months and a half, a harmonious, productive and future-oriented working relationship based mostly on strategic foundations has been established between the Hungarian State, which actively helps the consolidation of the sector each on the regulatory and possession facet, and VIG as a skilled companion and majority proprietor dedicated to the Hungarian market. The group’s pursuits in Hungary achieved excellent monetary leads to 2022 and within the first half of 2023, the ministry stated in a assertion.

Please word: final 12 months, Aegon achieved a post-tax revenue of 9.5 billion, and Union a post-tax lack of -2.1 billion, after the state deducted a important a part of the end result within the type of further tax, for instance, within the case of Union, it clearly took extra from the insurance firm than it may within the type of dividends. could be.

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By conserving the ten p.c minority share, the cooperation can proceed alongside the strains of the beforehand collectively established possession targets, and on the similar time inside an much more efficient framework based mostly on the collected expertise, whereas the state can elevate financing sources for the acquisition of different strategically necessary belongings, the ministry’s announcement states.

The Hungarian Government continues to treat the insurance sector as a strategic sector, the event, competitiveness and customer-oriented operation of which is of prime nationwide financial curiosity

they added.

The Austrian buyer, the Vienna Insurance Group, additionally spoke, CEO Hartwig Löger, who beforehand labored because the Austrian Vice-Chancellor, stated:

In Hungary, as in all our nations, we comply with a long-term market technique. With the buyback, we emphasize our long-term dedication to the Hungarian market, and we sit up for persevering with our strategic partnership with the Hungarian authorities.

In February 2022, the state purchased a 45% minority stake in Aegon and Union Biztosítók for 350 million euros, or HUF 133 billion at immediately’s alternate charge. Although the sale value of the 35% stake to be offered has not been disclosed, the worth of the two insurers has not likely elevated because the buy, as the federal government has since launched the extra insurance tax, which we estimate is sort of 11 billion for Aegon, which has since been renamed Alfa, and for Union and it’ll value greater than HUF 6 billion this 12 months alone. If, for the sake of simplicity, we calculate an unchanged firm worth, the state can obtain HUF 89 billion for the 35% share of the two insurance companies, which is roughly the identical because the sale of Erste Bank’s 15% introduced final week, which was HUF 87.5 billion. Another similarity is that the present sale, much like the sale of Erste Bank, will definitely turn out to be useful for the joint buy of Budapest Airport with the French.

After all of this, it stays a thriller what was the purpose of the state journey of the previous 12 months and a half within the two insurance companies. It can also be obscure why it’s essential to retain a 10% stake within the two insurance companies, as a result of the Austrian VIG as the bulk proprietor can exploit the income and value synergies between the companies on a skilled foundation, with out the presence of the state as proprietor. In addition, we have now not seen important market-building and competition-catalyzing habits on the a part of Alfa and Union prior to now 12 months and a half, which might have made it worthwhile to undertake the consulting charges and different state bills essential for the transactions.

However, what the stability of the two transactions (shopping for and promoting) is for the state and thus for the taxpayers, may solely be judged extra exactly by realizing the sale value, however this has not been revealed but.

How has the connection between the two homeowners been to date?

In July, Gábor Havas, the brand new president and CEO of Union Biztosító, informed Portfolio in regards to the relationship between the two homeowners:

“Looking again, it can’t be stated that there have been conflicts or disagreements between the two homeowners, but additionally that there was no activity to make clear the framework of the cooperation initially. The traits, administration tradition, decision-making and accountability mechanisms, and administration fashions of the two homeowners differed a lot that it was essential there was an intensive communication to ensure that the processes to grow to be easy and for the events to know one another’s factors of view. Today, in follow, I additionally discover that the two homeowners acquired to know one another, along with the total sensible clarification that

the skilled administration is VIG, the minority possession function is within the fingers of the Hungarian state.”

To our query whether or not the Hungarian state is a monetary investor in two insurance companies, he answered as follows:

“In my opinion, it’s greater than that: it occupies a place someplace between a monetary and a skilled investor, which clearly signifies and strengthens the distinguished function of the sector by way of the nationwide economic system. It doesn’t act merely as a monetary investor, however

he’s a robust opinion maker in strategic issues, however on the similar time he doesn’t intervene operatively in insurance technical issues.

It is like a basic shareholder with a giant share of possession: it strictly calls for that the enterprise effectivity develops correctly, however how precisely the insurance firm achieves that is as much as the administration and VIG, appearing as a skilled investor. I wish to cite an instance: there may be a concrete thought of ​​synergy on the a part of the homeowners, during which Corvinus Befektetési Zrt., representing the Hungarian state, displays the identical demanding habits as VIG. Such is the difficulty of enterprise progress and effectivity, the mitigation of the results of the extra tax and the steady upkeep of solvency necessities.”

What would be the destiny of the opposite two state insurance companies?

On September 5, it was introduced that Corvinus International Investment Zrt., which is 100% owned by the Hungarian State, will promote its 66.9 p.c stake in Magyar Posta Életbiztosító Zrt. and Magyar Posta Biztosító Zrt. , which he solely acquired this 12 months. The worldwide consulting firm Deloitte was commissioned to conduct a clear gross sales process in accordance with worldwide requirements and greatest practices, they stated. We interviewed the CEO of Posta Biztosító within the spring:

In the case of Posta Biztosítók, following the preparation of the method, the indicative provide part, which begins initially of October, is scheduled to final till the tip of October. The necessary provide part could be accomplished by the tip of December, on the idea of which the contract could be concluded with the chosen purchaser initially of subsequent 12 months.

Cover picture supply: Portfolio

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