TIRANA, March 10 – Albanian-owned insurance operator Eurosig has emerged as the frontrunner in the race to buy state-run INSIG insurer following a series of failed privatization attempts.
In a tender held this week, Eurosig which has been operating in the Albanian insurance market for a decade and increased its market share to 15 percent in 2015, bid 2.2 billion lek (Euro 15.8 million) to buy INSIG, compared to a starting price of €15.3 million set by the Albanian government.
An American-Albanian joint venture between Recovered Earth Technologies and Duraku was the second highest bidder offering 2.15 billion lek (€15.3 million) for 100 percent of the company’s shares. Recovered Earth Technologies, a U.S.-based company operating in the oil and gas sector was the only foreign company to participate in the tender.
Balfin Group, one of the biggest Albanian-owned companies, bid 1.65 billion lek (€11.8 mln) while a joint venture formed by Kastrati oil operator and its Albsig insurer bid 1.52 billion lek (€10.8 mln).
An evaluation commission is expected to announce the winner on March 19 while the transaction and the signing of the contract will be made 30 days after a government decision on the tender winner.
The sale of INSIG also sparked debates in Parliament with former Prime Minister Berisha accusing the government of selling INSIG below cost while Prime Minister Rama blamed the former Berisha government of turning INSIG from a regional market leader into a bankrupt company with a market share of less than 5 percent.
INSIG, once the holder of a monopoly of the Albanian insurance market, has been losing considerable market share in recent years due to the market liberalization and tough competition from private players.
INSIG’s saw its Albania market share further drop to 5.84 percent in 2015 in the non-life segment while its life insurance share dropped to 8.42 percent, down from 11.8 percent in 2014, according to latest data by the Financial Supervisory Authority.
Back in 2009, American Reserve Life Insurance, part of Heritage Guaranty Holdings, withdrew at the last moment after offering €25 million ($36.9 million) for 61 percent of INSIG’s shares.
The Albanian insurance market, dominated by two Austrian insurance groups, is overwhelmingly non-life oriented with around 91 percent while compulsory motor vehicle insurance accounts for 60 percent of total insurance premiums. Some ten insurance companies operate in Albania, of which only INSIG remains wholly state-owned following unsuccessful privatization attempts.
The Albanian government is also planning to sell off minority stakes in key enterprises and privatize key remaining strategic enterprises by 2017.
The government has announced new plans to offer 100 percent of Albpetrol’s shares for 95 million euros in 2016 in a move which is not favored by international oil prices standing at a 12-year low. The 16.7 percent state-owned shares in Albtelecom operator are valued at 26.6 million euros while the 15 percent stake in ARMO oil refiner at 22 million euros. Both tenders are scheduled for 2017.
More than 100 smaller assets such as former school and warehouse facilities have also been put up for sale.
