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POLAND

Polish insurer PZU to spend €3 bln to expand

Poland’s top insurer PZU plans to spend up to €3 billion ($4.7 billion) for expansion abroad that will focus on the Ukrainian and Russian markets, its chief executive said on Thursday.

A decade-old ownership feud between Poland and Dutch insurer Eureko has prevented PZU from significant expansion outside of Poland, where it dominates the market but has been losing ground to competitors. “PZU is currently a leader on the central European markets, but in order to maintain this position will be nearly impossible without an international expansion,” CEO Andrzej Klesyk said at an annual shareholders meeting.

He added that the group, which has $25 billion in assets, will target neighboring Ukraine and Russia because it missed most opportunities in the region’s more developed markets, such as Hungary and the Czech Republic. “To develop a presence in Russia we need to spend more than 5 billion zlotys. If we want to enter other countries in the region then our spending would reach €2.5-3 billion,” Klesyk said. PZU considered paying out 1.4 billion zloty ($654 million) in dividends, but decided to hold on to the cash to fund expansion.

Poland’s centre-right government had restarted talks with Eureko to settle a long running dispute that could cost the state coffers as much as $14.4 billion in damages that Eureko is seeking at an international arbitration court. Eureko has slightly less than a third of PZU, while Poland controls 55%. Poland has reneged on a promise to float PZU and to cede control to the Dutch group. The two sides had hoped to come to an agreement in June, but a resolution is not expected for another few months.

(BBJ 27.vi.08)

 
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