BUSINESS

Insurer Seeks Merger

By Yekaterina Dranitsyna

Staff Writer

Yekaterinburg based Euro-Asian Insurance company (EACK) is considering a merger with St. Petersburg insurer Russky Mir, Interfax reported Wednesday, citing Vladimir Ostrovsky, head of the insurance industry inspection board in the Ural region.

Ostrovsky said EACK’s license has been suspended because of improper financial policy and abuse of liabilities, leading the Yekaterinburg firm to seek mergers with several insurers, including Russky Mir.

When contacted on Wednesday, Russky Mir strongly denied any merger plans with EACK, saying it would only consider the acquisition of a financially stable insurer with notable market presence.

Ostrovsky said that EACK will have their license revoked should the company fail to prove financial improvements through convincing documentation.

The warning has left EACK desperate to renew their license using “any means” available, including “working in partnership with others companies,” Veronika Lamberova, marketing director of EACK, told Interfax this week.

Lamberova could not be reached for comment on Wednesday or Thursday.

Industry experts said a merger between the two companies could be a good solution.

“The acquisition of EACK by Russky Mir would be a rational step because it would enables EACK to keep its insurance portfolio and serve its clients under the Russky Mir license,” said Ivan Smirnov, Senior Associate at DLA Piper in St. Petersburg.

“Another solution would be to hand over part of its insurance portfolio to Russky Mir, if the latter has the necessary licenses and financial resourses to carry liabilities,” Smirnov said, adding that it would nonetheless be a time-consuming, high-cost option.

Russky Mir denied any partnership possibility or plans to buy EACK. While several former EACK employees had transferred to Russky Mir recently, this would not evolve into an issue concerning the whole company, a representative of the St. Petersburg insurer said Wednesday in a telephone interview.

“Information about the merger has circulated in the Urals for a month. We issued an official statement denying it. Perhaps we could make one more statement especially for Ostrovsky,” said Yevgeny Gurevich, marketing director at Russky Mir.

Gurevich said that a merger would be impossible because of the different sizes of the two companies and EACK’s serious legal problems.

Russky Mir has 110 branches operating in 62 regions, providing 59 types of insurance. EACK operates only in three regions, with slightly more than 20 types of services on offer.

“License suspension is a usual procedure for the Russian market. The federal insurance inspection revokes and renews the licenses of several firms every week,” Smirnov said.

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