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EBRD buys 30% of Azeri insurer MBASK
The European Bank for Reconstruction and Development is making its first
investment in Azerbaijan’s developing insurance market by buying a 30 per cent
stake in MBASK Insurance Company. By increasing MBASK’s capital base, the
investment will allow it to provide more non-life products to both commercial
and private customers.
Azerbaijan’s insurance market is growing fast. Premium volume increased by
13.5 per cent in2004 alone. MBASK, one of the top five insurance companies by
market share in a market of 29, offers insurance products focusing on clients
outside the oil and gas sectors. Among the major insurance companies in
Azerbaijan, MBASK is one of the few not to have to have focussed exclusively
on the oil and gas industries and to have developed a full range of life and
non-life insurance products. Jamil Melikov, CEO of MBASK Insurance Company,
said: “the insurance market in Azerbaijan continues its fast development and
it is important for MBASK to remain at the forefront of this development”.
MBASK intends to gradually build on its 7 per cent market share. To ensure
that it can write the higher level of business anticipated in 2005, the EBRD
and existing shareholders will both subscribe to an increase in MBASK capital
of 7.7 billion Azeri manat (€1.25 million). The Bank expects to participate in
further capital increases of MBASK to preserve its stake at 30 per cent. “The
Bank is a major investor in the insurance sector throughout the region,” said
Jonathan Woollett, the director responsible for non-bank financial
institutions at the EBRD, “and will use this experience to help MBASK in the
development of its insurance operations”.
The Bank’s strategy is to support the development of financial institutions
outside banking, especially in insurance, in countries where there are few
strategic investors and where capital availability is limited. This is the
Bank’s second such investment in the insurance sector in a CIS country,
following a 2003 deal in Kazakhstan in which the Bank took a 35 per cent
equity stake in Kazkommerts Policy, alongside Kazkommerts Bank.
This project is part of the Bank’s “Early Transition Countries” (ETC)
initiative. This was launched in 2004 to stimulate market activity in the
Bank’s poorest countries of operations by using a streamlined approach to
financing more and smaller projects.
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