“Poland-based insurance giant PZU has revealed that it could spend PLN5 billion on acquisitions.” Is this news of September 2010 or July 2008? We at The Insurer would say, both.
PZU’s senior management is clearly not content with running the largest CEE insurer by premium. They want to expand, to reach out to new horizons, to see the sky as the limit... Unfortunately, the only step towards expansion PZU has been making so far is regular announcements. The attitude and the wording are standard all the time, the acquisition budget somewhat reduced by the crisis: in July 2008, it reached PLN10 billion (around EUR2.5 billion). One would assume, if the financial storm hadn’t come ashore, PZU’s press department could just copy-paste the same annoucement each time the big bosses feel like reaching out to new horizons. So, what for us readers is a deja vu, for the PZU team may well be an idee fixe.
Just how likely is the Polish giant to finally make an acquisition within short-term period? Chances are rather low even if this time around PZU management is adamant. In the first half of the year, PZU saw its net profit dropping 49% on H1 2009 against the backdrop of weaker investment results and flood losses. The projected full-year net profit will be at least PLN1 billion lower than the 2009 figure of PLN3.8 billion, according to Andrzej Klesyk, PZU’s CEO. This doesn’t seem to be a good time for the company to enter new lands.
Finally, Central and Eastern Europe doesn’t have too many interesting acquisition targets: all the best women companies are taken. PZU has been eyeing the Belarusian state company Belgosstrakh – but just like PZU has been repeatedly promising to buy somebody, the Belarusian government has been promising to sell their insurance jewel...
So, we are not saying good-bye to this issue – something tells us we’ll be writing many more posts on it.
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