Polish PZU Has PLN5 Billion For Takeovers, Eyes Balkan Rivals

WARSAW--Poland's top insurer Powszechny Zaklad Ubezpieczen S.A. (PZU.WA) is ready to spend 5 billion zlotys ($1.6 billion) on takeovers in the region, PZU Chief Executive Andrzej Klesyk said Tuesday.

Mr. Klesyk said the insurer is interested in buying controlling stakes in Croatia Osiguranje d.d. (CROS.ZG) and Slovenian Triglav Osiguruvane AD (VROS.MN) once they have been put up for sale by their respective governments.

"We are only interested in having control of the companies that we buy," he said.

Powszechny Zaklad Ubezpieczen is setting its sights on its peers in the region as its domestic position prevents it from buying local rivals, but so far the company has failed to acquire a foreign insurer.

Mr. Klesyk said the merger plans will not hamper the company's payment of extraordinary dividends worth up to PLN3 billion by 2015 on top of the insurer's usual 50%-100% of earnings paid out annually.

The extraordinary dividends will be financed with a subordinated bond issue worth up to PLN3 billion with maturities of minimum 10 years and at least two tranches.

"We want to have the issue wrapped up sometime in mid-2014," Mr. Klesyk said, adding a euro or dollar denominated tranches are also possible.

PZU reported Tuesday a higher than expected second quarter net profit of PLN837 million on slightly better performance of its extensive financial assets portfolio. Analysts expected earnings to reach PLN776 million.

Write to Patryk Wasilewski at [e-mail]

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