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EBRD supports growth of Lithuania’s insurance sector
Lithuanians will be able to purchase a wider range of insurance products as a result of a €7.4 million equity investment by the European Bank for Reconstruction and Development (EBRD) in the country’s largest insurance company, Lietuvos Draudimas (LD). The EBRD is acquiring 14 per cent of LD’s capital from Codan, the Danish subsidiary of the British insurer Royal and SunAlliance (RSA). The transaction is being completed in conjunction with the Danish Investment Fund for Central and Eastern Europe (IØ Fund), which is also acquiring 14 per cent of LD’s capital.
"This is the EBRD’s first insurance investment in Lithuania. It will shift the focus of the Bank’s insurance portfolio eastwards, and confirms its strategy of promoting further investments outside the more developed markets of the Czech Republic, Hungary and Poland," said Jonathan Woollett, the EBRD’s Director for Non-Bank Financial Institutions. "This equity investment in LD will play a key role in continuing the company’s privatisation process and offering a greater choice of insurance products and services to consumers in Lithuania."
LD will use the funds to expand the range of products available in Lithuania and will particularly focus on the development of motor third party liability insurance and life assurance products.
The EBRD signed a €20 million co-investment agreement with the IØ Fund at the end of 1995 to cooperate in central and eastern Europe. Following the acquisition by the EBRD and the IØ Fund, Codan remains the largest shareholder with 51 per cent and is committed to ensuring a successful long-term future for LD.
Established in 1921 as the State Insurance Institution of Lithuania, Lietuvos Draudimas was recently privatised, with Codan acquiring the Lithuanian State Property Fund’s 70 per cent stake. The remaining 30 per cent was sold via a public share subscription in 1996. Codan subsequently increased its shareholding to 79 per cent via a capital increase. LD has approximately 50 per cent of the domestic non-life insurance market. It provides a wide range of insurance products in both non-life and life insurance. As the market leader, LD serves most of the largest well-known Lithuanian companies. It operates throughout Lithuania and has branches in all major industrial and district centres.
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