TIRANA, Jan. 25 – The Albanian government has announced a new tender to sell its fully-owned INSIG insurer following a series of failed attempts since 2009 when a U.S.-based insurer unexpectedly withdrew from the purchase.
In an announcement published on the Public Procurement Agency bulletin, the finance ministry invites bids for the sale of 100 percent of the state-owned shares in the insurance company which also operates in neighbouring Kosovo and Macedonia.
The company’s assets are estimated at €15.3 million, almost three times less compared to late 2008 when the state-run insurer held a stronger market position.
Bidders are required to offer a 30 million lek (€214,000) bank guarantee in the international tender scheduled for March 10, 2016. The winner is expected to be announced nine days later, says the finance ministry.
Last year, the Albanian government approved a new formula on INSIG’s privatization, removing it from the list of strategic privatizations to ease its sale.
Under the new formula, the submitted bids will be assessed based on three criteria under which the highest bid will have the overwhelming majority of 80 points, followed by the business plan and quality of investor with 10 points each.
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 finds itself in a severe financial situation and has been losing considerable market with its current share at less than 7 percent and out of the top-three insurance companies,” Economy Minister Arben Ahmetaj said last year.
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.
The remaining state-owned assets are being offered at a time when privatization revenue during the past couple of years have been at a record low following the sale of four small and medium-sized hydropower plants in 2013 to Turkey’s Kurum for around €110 million.
