Serbia asks Fondiaria for more in insurance sale
(Releads, adds market reaction, quotes, details)
BELGRADE, Nov 19 (Reuters) - Serbia asked Fondiaria (FOSA.MI) on Monday to raise its offer for the country's second biggest insurer, DDOR, in a bid to save what was supposed to be the first major privatisation in the sector.
The fact that the Italian company's bid was the only one, and its pricing at at barely 1.2 times DDOR's annual gross written premium, were seen in financial markets as a vote of no confidence in Serbia's financial sector.
Sources familiar with the talks told Reuters that Fondiaria offered 184 million euros ($269.4 million) for an 83.3 percent stake in the insurer.
"We would have expected at least 2.2-2.3 times the premium to reflect a fast growing market and a 30 percent market share," a senior source in the company told Reuters. "But this is even less then our expected gross written premium for this year."
DDOR's gross written premium was 145 million euros in 2006.
Dragan Djuricin, chairman of accountants Deloitte in Serbia, DDOR's auditors, called it "a bad signal, because DDOR is a good company".
"We are seeing an impact of the global credit crunch. At a time of crisis you don't buy risk and Serbia is a high-risk country," Djuricin told reporters while waiting for official word on the bid's fate.
The government appeared resigned.
"The tender commission is not head over heels with this offer," Slobodan Ilic, state secretary in the Finance Ministry, told reporters. "We will try to find the best possible solution in the next five days."
The news weighed on the stock exchange, bruising the financial sector, with some listed banks and insurers dipping by more than 4.0 percent.
Currency dealers said worse was yet to come.
"This is a clear no-confidence vote and the dinar EURRSD= will not be spared. Today, many people refrained from selling euros. We could see a lot of euro buying tomorrow," one dealer said.
Unhappy that just one bid emerged from 11 original potential buyers for unlisted DDOR, the government initially accused financial adviser BNP Paribas of a "bad call" in leading it to believe it would get a good price.
But later, Ilic said that some bidders said they could not meet the high price it expected, and he acknowledged some might not have found DDOR financially attractive.
"Some cited the political situation and the forthcoming Kosovo status settlement process," he added, referring to Serbia's negotiations with its Albanian-majority breakaway province, which demands independence.
When the government launched the tender in May 2006, bids came from a dozen firms including France's Axa (AXAF.PA), Germany's Allianz (ALVG.DE), and Belgium's KBC KBKBt.BR, Swiss Baloise (BALN.VX), Greece's National Insurance ETHr.AT.
(editing by Paul Bolding)
((gordana.filipovic@reuters.com, +381 11 311 4254; Reuters Messaging: gordana.filipovic.reuters.com@reuters.net)) Keywords: SERBIA DDOR/BIDS Keywords: SERBIA DDOR/BIDS
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