German Insurer Provinzial Owners To Decide Soon Whether To Sell Company

   By Ulrike Dauer 
 

FRANKFURT--Owners of German primary insurer Provinzial Nordwest Holding AG will decide in the next two weeks whether to put the company up for sale, which would open bidding to commercial insurers like Allianz SE (ALV.XE).

The owners will decide "very soon" whether to sell the company, "and if so, on what terms," a spokesman for one of the co-owners said Wednesday. Three of the four owners have scheduled meetings in the next two weeks, so a decision can be expected before the Christmas holidays, said several people close to the matter.

The decision will be widely watched amid fears that a sale and subsequent restructuring could cost thousands of jobs.

Financial Times Deutschland reported last week that Allianz has made an offer for the regional insurer. According to FTD, Allianz is offering at least 2.25 billion euros ($2.94 billion), equivalent to Provinzial's book value, and Allianz's chief executive recently met the insurer's three main owners to discuss the offer. An Allianz spokesman declined to comment Wednesday.

Labor union Verdi estimates about 6,000 jobs could be at risk if the company were sold to Allianz.

Provinzial, which operates in northern and western Germany, is 40% owned by the savings banks in Westphalia-Lippe; the regional authority, or Landschaftsverband, of Westphalia-Lippe owns another 40%; the savings banks in Schleswig-Holstein own 18%; and the eastern German savings banks own the remaining 2%.

On Tuesday, the three main owners met at the Provinzial Nordwest headquarters in the northern German city of Muenster. After the meeting, they stated "that there's interest on the part of insurers" in buying Provinzial.

Verdi demands that Provinzial's supervisory board hold an extraordinary meeting before Christmas and its owners "immediately stop all considerations to sell the insurer to the private sector," said Frank Fassin, who heads Verdi's regional financial institutions group and is a member of Provinzial's supervisory board.

Provinzial, which has property/casualty and life insurance operations, had gross premium revenue of around EUR3.04 billion and booked a net profit of EUR116.2 million last year. It employs 2,960 people.

Last week, co-owner Landschaftsverband said it isn't planning to sell its 40% stake and a sale would need the approval of all shareholders.

Regardless of the outcome, discussions on Provinzial's future should step up consolidation pressure among all 11 German insurers still owned by the public sector, people familiar with the matter say.

Write to Ulrike Dauer at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires