Alpha Bank has reached an agreement with Universal Life Insurance Public Company Ltd and Altius Insurance Ltd, achieving the merger of the two and their acquisition.
Following this agreement, Alpha Bank becomes one of the three largest insurance groups in Cyprus in both the Life and General Insurance sectors, while maintaining its leading position in the Accident and Health sector.
The terms of the agreement
Specifically, Alpha Bank has agreed the following:
- with the shareholders of Altius Insurance Ltd. for the acquisition of its entire share capital and
- with the majority of the shareholders of Universal Life Insurance Public Company Ltd. for:
1) the merger of Universal and Altius into a single combined insurance company, and
2) the main terms and conditions, under which a company of the Alpha Bank Group will acquire a majority stake in the Single Company, resulting in Alpha Bank Group holding a majority stake in it.
The third part of the agreement is the conclusion of a long-term strategic partnership with Universal’s main shareholder, Photos Photiades Group, with the aim of jointly implementing the parties’ insurance development goals in Cyprus and abroad.
As underlined in the text of the agreement, Altius’ management team remains committed to supporting the implementation of the joint strategic plan.
The transaction is estimated to bring to the bank:
- a return on capital employed (RoCET) of over 20%,
- an increase in earnings per share (EPS) of approximately 2%, with net profits of the Cyprus operations increasing by over 20%,
- an improvement in return on equity (RoTE) of over 30 basis points, and
- a limited impact, of around 23 basis points, on the CET1 ratio, fully consistent with Alpha Bank’s publicly announced capital allocation policy.
With this transaction, Alpha Bank accelerates the implementation of its strategy by strengthening the quality, diversification and resilience of its revenue base through increased fee and commission income generation and is characterized as low capital intensity.
At the same time, this is expected to result in the creation of significant synergies, as it will leverage an expanded network of approximately 400 insurance agents and a base of 100,000 customers, more than doubling the Group’s capabilities for cross-selling banking products and ensuring additional revenue from asset management services.
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