EU EXPANSION WILL CONCENTRATE BUSINESS
Dr. Wolfgang Weiler, member of HUK-Coburg Management Board and of the Supervisory Board of Bulgarian Estates insurance companies, to the BANKER weeklyMr. Weiler, when did HUK-Coburg decide to acquire a share in Bulgarian Estates? Why didn't you set up a greenfield company for example?- We estimated there were quite a number of insurance companies in Bulgaria already and it would be more pertinent to acquire two of the already operating insurers. We had all the necessary permissions for making business in this country. Legal requirements were observed and we could directly step onto the market. In fact, had we not found a company, suitable to buy, we would had set up a new operation. However, we contacted the shareholders in Bulgarian Estates and it turned out they were willing to go out of the company and sell us their stakes. This was the better, and less risky option for us.Wiener Stadtische is your partner in the Bulgarian insurance companies. What is the idea of this partnership?- We have already been operating for 20-30 years in the insurance business together. We have worked for them in Germany, and they have assisted us in Austria. In the late 1990's we in HUK-Coburg decided to step out of Germany (till then we were operating on the domestic market alone). We were seeking a way to get a foothold on the neighbouring East Europen markets as we could not expand to the West. The Western markets are too crowded and it is quite expensive to buy there. At that time Wiener Stadtische had already made its first steps on the Eastern markets. We came to the conclusion that we need the financial participation of a partner who could be a good manager as well and concede us its know-how.Your first joint project was the general insurance company Compensa in Poland. Why did you choose Poland?- Simply because this is the largest market in any of our neighbour countries. Poland's population is 40 million and this seemed promising to us. Moreover, the first big wave of foreign investments since the early 1990's had already passed through that country. Many of those investors were disappointed and were ready to sell at advantageous prices. Therefore, we had many opportunities to buy companies in Poland. A number of German firms made the same thing two or three years ago. But Poland is a difficult market now. Competition is strong, prices are quite low, and you could hardly make money there. And what are your expectations of the Bulgarian insurance market?- There is competition on every market, but I believe it would be easier in Bulgaria than in Poland. I look upon your country as a medium-term investment. I don't expect we'd double our size over the next five years. I see good prospects for Bulgaria's development, the country is gaining speed. We want to be here, to have already adapted and become efficient when the progress becomes visible. Then, we'll hold quite stable positions. Will you also direct your attention to the pension insurance market in Bulgaria?- This is one of our tasks for the months to come and for the year - to seek new opportunities and markets to develop and apply our experience. We are interested in life insurance. This is difficult as the market here is limited. We plan to improve car insurance regarding the damages where we are well-experienced. How do you estimate the consequences for the insurers in Eastern Europe after the expansion of the EU?- On one part, these countries' accession to the EU will facilitate their development. They will have free access to the markets. I cannot say anything more specific about Bulgaria as I do not have particular observations on the insurers operating here. However, a process of concentration can be witnessed in other countries. So, if we are among those who survive, the acquisition of companies in dire straits will be an opportunity for us to expand. If a firm gives up operations, another one takes up its clients because people have to be insured somewhere. As together with Wiener Stadtische we are strong, this is a good chance for us to expand on foreign markets.