Russian insurer Rosgosstrakh is planning to purchase Ergo Life, the Russian life insurance subsidiary of German insurer Munich Re.
The transaction, if it materialises, will be Rosgosstrakh’s first takeover since it returned to profit after years of losses and a subsequent bailout.
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Upon completion of the transaction, Ergo Life will operate as a subsidiary of Rosgosstrakh.
According to the publication, the acquired entity will be managed by Sberbank Life Insurance former chief executive Alexei Rudenko, whose appointment will be subject to regulatory approval.
After divesting Ergo Life, its parent company Ergo will retreat from the Russian market to consolidate its operations. Ergo is a group of insurance companies owned by Munich Re.
Ergo chief operating officer Alexander Ankel told the publication: “For us the agreement is another logical step to further driving our international business optimisation strategy.”
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By GlobalDataThe acquisition of Ergo Life will mark Rosgosstrakh’s return to the life insurance market after offloading its division to former owner Danil Khachaturov during the bailout process in 2017.
In lieu of a stake in the bank, Khachaturov agreed to divest Rosgosstrakh to Otkritie in 2017.
To prevent the situation from worsening, the Russian central bank then took over Otkritie.
In 2017, Otkritie pumped RUB106bn ($b1.62n) to recapitalise Rosgosstrakh and the insurance firm made a RUB3bn profit in the first half of this year.
Rosgosstrakh chief executive Nikolaus Frei told the FT: “We’ve had no financial help since December and we sold our last toxic asset in the second quarter. So far we’re very pleased, because our target for this year was a black zero.”
