Are you sure?

Life insurer CIG Pannonia plans share swap, cooperation with Granit Bank

Hungarian life insurer CIG Pannonia Life Insurance said Monday it signed a letter of intent on May 30 with Hungarian bank Granit Bank regarding conclusion of a future strategic-cooperation agreement.

The two companies plan to acquire minority stakes in one another as a sign of commitment to long-term cooperation, CIG Pannonia said.

The exact size of the stakes, as well as the method and conditions of their acquisition will be part of the strategic agreement to be prepared and signed within 30 days from the signing of the letter of intent.

The two companies plan to establish broad financial cooperation, including joint product development of innovative products and services, which could significantly increase their market share, financial strength and profitability.

The companies already signed a cooperation agreement on the distribution of a jointly developed life policy and a related current assets loan product offered to SMEs.

The cooperation may include entering segments of the Hungarian financial-services market where neither of them is currently present.

CIG Pannonia is a listed insurance company set up in 2008 by Hungarian businesspeople, including former central bank president Zsigmond Jarai, who is the chairman of the insurer's supervisory board. CIG Pannonia had after-tax losses of HUF 679m on revenue of HUF 7.9 billion from premiums in the first quarter, according to unaudited consolidated IFRS figures.

Granit Bank is a small bank recently acquired by Hungarian construction magnate Sandor Demjan's Hungarian Capital Company, a company that  Demjan established to help Hungary's SMEs recover from the crisis, with total assets of HUF 13.1 billion at the end of 2010, according to preliminary figures.