Vienna Insurance agrees to share ownership of the Hungarian unit to save the deal with Aegon

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Vienna Insurance Group AG has agreed to share ownership of its Hungarian operations with a public investment fund after months of negotiations, in order to claw back an 830 million euros ($ 941 million) deal to buy regional assets from ‘Aegon NV.

The insurer will authorize the state corporation Corvinus Nemzetkozi Befektetesi Zrt. to buy a 45% stake in the existing Hungarian subsidiary of VIG and the local units of Aegon, according to the resolution announced on Wednesday evening. The Austrian parent company will retain majority ownership and management rights.

The deal is the latest example of Hungarian leadership exerting regulatory pressure to expand government influence in the economy. VIG’s deal to buy Aegon’s operations in Eastern Europe and Turkey, signed in November 2020, has been suspended after Hungary’s Interior Ministry blocked the acquisition of assets in the country , citing a law on national commercial interests.

Corvinus has held a 15% stake in the local unit of Erste Group Bank AG since 2015 as part of a pact to reduce the Hungarian bank tax at the time.

The deal could strengthen VIG’s position as one of the largest insurers in Eastern Europe. It is already the market leader in the Czech Republic, Slovakia, Romania and Bulgaria, as well as its headquarters in Austria.

Copyright 2021 Bloomberg.

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Laura T. Thrasher