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In terms of insurance business opportunities in Ukraine are quite extensive given over 45 mln of population and the biggest market in Eastern Europe with low penetration of the insurance services. Latest research shows that in 2014 the share of assets of insurance companies doing business in Ukraine in the country’s GDP accounted for only 3.2 % compared to the same indicator in other countries such as Great Britain (96.5 %), the USA (45.2 %), Japan (66.9 %), France (63.0 %) etc.
In Ukraine business for sale in the insurance market became more attractive since May 2013 which brought alteration to the current Ukrainian legislation in terms of regulation of non-residents' activity. The gist of it lay in the opportunity provided for the foreign insurance companies to do business in Ukraine directly through their own representative offices upon fulfillment of a few legislative requirements. Before that they only were allowed to participate in the market via re-insurance activities. It is fair to note that the above mentioned changes were also to the advantage of Ukraine’s business as the national insurers received the same right to open their own branches and representative offices abroad.
The majority of the biggest insurers operating in Ukraine already have foreign investors. However some insurance companies qualify for the eligible business for sale in Ukraine and they actively look for the inflow of foreign capital.
Early October 2015 brought news of two major M&A deals.
The first announced deal involved purchase of 99.98 % of insurance company QBE Ukraine by the Luxembourg company Colonnade Finance whose doing business was also approved by the State Commission for Regulation of the Financial Services Markets in Ukraine. A month earlier the Canadian Fairfax Financial Holdings obtained the permission from the Anti-Monopoly Committee to buy over 50 % of the same business for sale.
The second deal resulted in the Dutch company International Insurance Consortium BV gaining control over 99.9993 % shares of Insurance Company “Providna” which was previously owned by Russian Rosgosstrakh.
Recent political crisis brought about some other changes. For instance, in Ukraine business of Ingo Ukraine and Ingo Ukraine Life insurance companies was sold by Russian Invest- Polis to some unknown companies with registration in Cyprus in early July 2015.
It is worth mentioning that one more deal fell through. Bolgarian Euroins Insurance group was denied the right to purchase in Ukraine business for sale of HDI Insurance by the State Commission for Regulation of Financial Services Market in September 2015.
This year was very fruitful in terms of the M&A deals compared to 2014 when the only one deal was concluded involving foreign capital. In June last year Ukrainian insurance company Retail Insurance was invested into by British “EMF New Europe Insurance Fund” with the subsequent re-branding to Talisman Insurance.
As of June 30, 2015 there were 374 insurance companies registered to do business in Ukraine. Currently almost ¼ of them have some share of foreign capital and only 5 % of all have100 % of shares owned by foreign investors. Each year 7-8 companies partly owned by foreign investors are included in top-10 insurance companies doing business in Ukraine as they are looked upon as the most solvent and reliable ones.
It is correct to conclude that recent foreign newcomers to national insurance market will also bring with them the prospect of stabilization and further growth which will have overall positive effect to our economy.