DDOR Novi Sad for sale?

Source: Svet osiguranja i finansija Sunday, 20.06.2010. 15:20

Italian insurance group Fondiaria SAI, the owner of DDOR Novi Sad, is going through a difficult financial period, which is the subject of numerous reports in Italian and European media in the last few months.

The company announced that the losses in the first quarter of 2010 reached EUR 92.3m, and that the damages and business costs amounted to 106.9% of unpaid premiums. In 2009, Fondiaria registered losses of EUR 343m.

Fondiaria SAI writes in its official statement that 2010 will be the year of stabilization. The Managing Board has decided to carry out broad reorganization within next few months, and the company has also changed the plan for expansion to other markets.

Few months ago, Italian analysts pointed out that French Axa was interested in buying the whole Fondiaria SAI group, while Italian daily newspaper Il Giornale reported on "discrete" contacts between the two companies. An unnamed analyst from Milan claims that the Ligresti family, the owner of the company, is not willing to sell the company at current prices because it would lose money in that case. Some other analyst announced that the owners would rather sell parts than the whole company if they had to.

In that article, several well-informed independent sources confirmed that Fondiaria had negotiated on sale of two firms in Italy and DDOR Novi Sad in Serbia, which is the youngest company in the possession of the group. The group has already hired a transaction adviser for DDOR Novi Sad.

The problem with the sale of DDOR Novi Sad is the same as the problem with the sale of the whole group - the price that could be obtained in the market at this moment is lower than the price at which DDOR was taken over. Fondiaria paid total of about 280 million euros for DDOR Novi Sad and, according to expert estimates, current market trends have cut in half the values from the previous years. Therefore, it can be expected that Fondaria SAI will sell DDOR Novi Sad only if there is no other option.

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