German reinsurer Munich Re has announced that it intends to sell the Russian non-life re/insurance business of its ERGO International division to Moscow-based insurer RESO-Garantia.
The property and casualty (P&C) subsidiary provides a range of insurance solutions both in Russia and internationally, including motor, voluntary health coverage, property, mortgage, travel, accident, life and liability insurance, as well as reinsurance products.
Under the purchase agreement, which was signed by representatives from both parties, RESO-Garantia will acquire 100% of the shares in the ERGO unit for an undisclosed price.
RESO-Garantia will subsequently take over the whole company, including staff, the client portfolio and IT systems, although ERGO explained that the change in ownership would not affect its obligations to current clients.
The announcement comes just one month after Munich Re revealed that it had sold three of its ERGO Group operated insurance subsidiaries to Allianz Group as part of its international portfolio optimisation strategy.
“With RESO-Garantia, we have found an investor that has an impressive and proven track record in the Russian insurance market,” said Alexander Ankel, Chief Operating Officer of ERGO International AG.
“Utilizing one of the most comprehensive branch networks in Russia with more than 900 branches and sales offices, RESO-Garantia is perfectly positioned to service millions of customers with tailor-made insurance products,” he continued.
“This agreement also sees us consistently pursuing our international business strategy of focusing on the markets in which we already have a strong footprint.”
Headquartered in Moscow, Munich Re’s Russian subsidiary currently ranks 17th in the Russian non-life insurance market and saw premium income of €103.4 million in 2017.
ERGO sold its Russian life insurance subsidiary to Rosgosstrakh in October 2018, but will remain active in the regional market through its Europäische Reiseversicherungsgesellschaft ERV travel insurance business.
“ERGO Non-life is a high quality business with strong consumer loyalty,” said Dmitry Rakovshchik, Chief Executive Officer (CEO) of RESO-Garantia.
“This acquisition advances the non-organic part of RESO’s growth strategy aimed at expanding its highly profitable motor insurance portfolio and maximizing cost synergies,” he added.