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EBRD and Finland’s Pohjola group strengthen their Russian insurance venture
The European Bank for Reconstruction and Development (EBRD) has increased its participation in its Russian insurance venture with Finland’s Pohjola group as part of a strategy to extend investments in the sector. Under an agreement signed in London on 1 September, the EBRD agreed to contribute US$ 325,000 to increase the statutory capital of Russian Life Investments (RLI), the UK-registered vehicle managing its interests in AO Principal. The capital increase will boost the EBRD’s stake in Principal to 32 per cent from 10 per cent. Pohjola holds the remaining shares in Principal.
"The EBRD recognises the importance of the insurance sector in the development of the Russian economy and is looking to extend its investment in the sector beyond this capital increase for Principal," said Jonathan Woollett, Director at the EBRD responsible for Non-Bank Financial Institutions.
Principal specialises in providing non-life insurance services to multinational and Russian clients. The company, which has its head office in Moscow, was originally established with EBRD participation as a pure life insurer in 1995 in an attempt to pioneer the long-term life insurance business in the Russian Federation. In early 1999, Pohjola acquired a majority stake in Principal.
"We are pleased Pohjola decided to enter the business just after the 1998 crisis. It showed a good sense of timing and we believe the Russian insurance sector now has huge potential," Mr Woollett said.
The EBRD has invested in the insurance and pension sectors throughout central and eastern Europe, making 15 equity investments in Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Lithuania, Poland and Russia.
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