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Summary of transactions

 

 

 PPF in the Insurance Industry

(1996 – 2013)

Česká pojišťovna is one of the companies that have the longest tradition on the Czech market. The company’s history dates back to 1827, when its predecessor, První česká vzájemná pojišťovna, was established. Post-1948, it established itself as Československá státní pojišťovna, the only institution of its kind in Czechoslovakia, a position it retained for a long time, and which also held enormous potential for the company’s successful development after 1989. Unfortunately, Česká pojišťovna’s then management failed to take advantage of this prominent position, both commercially and financially. Despite the potential opportunities that the strong market position gave the company, Česká pojišťovna made considerable losses at that time and its rigid approach to services and unfriendly approach to customers, inherited from the Communist era, were damaging the company. It also lacked a long-term strategy and efficient organisation, its investment portfolio was of poor quality, and its financial and operating reporting was also unsatisfactory.

In 1996, PPF bought into Česká pojišťovna, with the objective of changing its obsolete structure and building a strong company through efficient management. The gradual transformation of Česká pojišťovna, a process that took several years, was so successful that the company attracted the attention of Assicurazioni Generali S.p.A. (“Generali”). The result was the establishment of Generali PPF Holding, a joint venture between Generali (with a 51% stake) and PPF Group (49%), in which Česká pojišťovna became the key asset. Following many years of successful co-operation, which has given rise to one of the biggest players in the Central and Eastern European insurance market, with profitability outperforming its competitors, in early 2013 the partners agreed that Generali would buy PPF’s stake in two tranches. By the end of 2014, Generali will therefore become the owner of the 100% equity interest in Generali PPF Holding.


“The agreement with Generali marks the end of an important stage for PPF. The agreement, together with the dividends received over the past five years, represents an excellent return on our initial investment. The transaction is therefore in fact a culmination of 16 years of work that began by our acquisition of Česká pojišťovna. In addition, we are retaining the key insurance companies in the CIS countries, which fit very well within our rapidly growing business in financial services.”
Petr Kellner, founder and majority shareholder of PPF Group

Transformation of Česká pojišťovna: Facts and Figures

 

  • 1996: PPF Group acquired a significant stake and management control in Česká pojišťovna and immediately started to transform the company’s business model. Despite the changes under way, and facing growing competition from the dozens of new insurance companies that were sprouting up at that time, Česká pojišťovna retained its clear leadership in the Czech market. It was successfully developing its Slovak subsidiary and also expanded to markets in Russia, Kazakhstan and Ukraine.
  • August 2006: Home Credit Group, established by PPF Group in 1997 with a view to providing consumer finance services in the CEE region, was demerged from Česká pojišťovna; the result was the emergence of two distinct and different areas of PPF Group’s business: insurance, and consumer financing.
  • 2007: Ladislav Bartoníček, Česká pojišťovna’s long-standing Chairman and CEO (1996 to 2013), became a shareholder of PPF Group. He currently holds a 0.50% stake in PPF Group.
  • 2008: For PPF, this was the year of the last stage of Česká pojišťovna’s transformation into a leading provider of insurance services in the Czech Republic, which it has remained to this day. PPF Group remodelled the originally extensive and inflexible organisation, notorious for the poor quality of its customer services, into an institution featuring quality on a par with the largest European insurance companies and capable of retaining its market leadership in an environment of keen competition on a long-term basis.
  • January 2008: Combining their insurance assets, know-how and experience in the Central and Eastern Europe (CEE) region, PPF Group and Generali set up a joint venture, Generali PPF Holding (GPH). This move resulted in one of the largest insurance groups in the region. As part of the transaction related to the formation of the joint venture, PPF Group received EUR 1.1 billion in cash, thereby becoming a 49% shareholder of the company.
  • January 2013: PPF and Generali agreed that Generali would buy PPF’s 49% stake in GPH. For this equity interest, Generali will pay a total of EUR 2.7 billion in two tranches, including dividends from retained earnings. On 28 March 2013, Generali acquired 25% of the shares in Generali PPF Holding (GPH) for EUR 1.286 billion; PPF Group will receive EUR 1.235 billion for its remaining 24% stake in GPH from Generali by the end of 2014.

 

 

 

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