Uhispank to determine its role in insurance companies

TALLINN - As the result of bank mergers, Estonia's Uhispank has become a shareholder of two Estonian insurance companies and has to make a decision this week about its participation in these competing companies.

Uhispank is currently violating a treaty it signed with the shareholders of Seesam Insurance company, according to which it may not participate in a competing company.

The bank acquired its stake in Seesam Insurance through the merger with the Pohja Eesti Pank, which had also acquired a stake in ETAS Insurance. Last year, ETAS Insurance merged with Leks Insurance and through this merger, Uhispank became a shareholder of Leks Insurance.

The bank's share in Leks Insurance is about 35 percent, while in Seesam Insurance it is 20 percent.

The bank is interested in cooperating with life insurance companies and selling insurance services. According to Uhispank's Marketing Manager Jurgen Lamp, the bank is interested in at least an 80 percent stake in a life and pension insurance company.

According to a representative from a competitive insurance company, the bank might not get to increase its stake in Seesam Insurance since its shareholders are not interested in a dominant position for the bank. The other two owners in Seesam Insurance, the Finnish insurance company Pohjola and the American company AIG have already shown their interest in increasing their shares in Seesam through the secularization of Uhispank shares.

Leks Kindlustus has not opposed the bank's decision and says that Uhispank would be a good strategic partner for cooperation in the Baltic region.

"As an insurance company, Leks has an ideal background of owners in terms of reliability and efficiency. Our strategic investor Swiss Re and Leks look at the future of the whole Baltic region. We do not relate to Estonia and its 1.5 million people but to a population of 8 million people," said Rivo Saarna, the representative of Leks Group.

Swiss Re is an international insurance company, which owns a 16 percent stake in Leks and whose partnership has brought many advantages to Leks.

"Uhispank is directed to the Baltic market and it is useful to have a joint Baltic strategy," said Saarna.

"It is not wise for Uhispank to develop two companies, which compete with each other. It is like competing with oneself. In the end, the bank has to make its decision," said Saarna.

If Uhispank is to increase its stake in Leks, the company would either have to increase its share capital or the owners would sell their shares to Uhispank.

Janek Maggi, the vice president of Uhispank, did not want to comment on the situation before the decision is made public.

"It is like a decision with different variables," said Maggi of the collective decision, which may even make relations between the negotiators problematic. "There are three possibilities: either we choose Seesam or Leks or establish an insurance company of our own."