Consequently, Codan could end up owning all shares in Latvian insurer Balta, and the total investment would thus amount to approximately 285 million Danish kroner ($33.73 million).
However, just like in a previous case with the top Lithuanian insurer, Lietuvos Draudimas, Codan's major business partners are supposed to acquire stakes in Balta to the extent that Codan's holding is reduced from 73 percent to 51 percent.
In this case Codan's investment will total approximately 145 million Danish kroner, according to a company report to the annual general meeting of Codan's shareholders May 10.
Codan's co-shareholders in Lithuania are the European Bank for Reconstruction and Development and Denmark's Investment Fund for Central and Eastern Europe.
Apart from Denmark and Lithuania, Codan (formerly A/S Forsikringsselskabet Codan) provides insurance and financial services in Sweden and Norway.
As of May 17 the agreement on the sale of Balta shares to Codan has taken effect, Balta reported.
Under the deal, Codan acquired 73.35 percent of Balta shares. In accordance with a mutual agreement, the price per share is 4.5 lats ($7.20) while total value of the deal will be about $25 million.
Under the agreement signed in Copenhagen on February 28, Codan bought Balta's shares held by the Latvian insurance company's shareholders Bastions ZS, Development Capital Corporation and Vista Capital Corporation LLC.
The agreement set the completion date of the deal as June 1, 2001.
About 15 percent of Balta shares belong to the Finnish insurance group Sampo, with which Balta had held negotiations on the sale of the company's largest share package. However, an announcement came last June that no agreement had been reached and that the deal would not go on.
As a result of the deal Codan emerges as majority owner in the leading Latvian and Lithuanian insurer groups as well as the largest insurer in the Baltic states, the company reported.
Balta is the largest non-life insurance company in Latvia and its shares are traded on the Riga Stock Exchange's official list.
Balta non-life insurer is a part of the insurer group Balta, which also comprises the non-life insurance company Rigas Apdrosi-nasanas Sabiedriba and life insurance company Latva.
The Balta group has set its profit target for this year at 2 million lats, according to the company's budget.
Last year the group's profit after taxes was 1.86 million lats, from which it is expected to pay 0.13 lats per share in dividends. From this year's profit it is planned to pay 0.14 lats in dividends.
Balta said Codan has sent a letter to the Latvian Stock Market Commission to get permission for the buyout offer.
"This offer will be made as soon as permission from the commission is received," the company said in a statement.
Under the law on securities, a shareholder owning half, more than half or more than three-quarters from the total amount of shares with voting rights must make a buyout offer to the company's minority shareholders.
In April, Lietuvos Draudimas and Balta agreed to cooperate in organizing the two companies' operations in customer services, providing third-party motor liability and export credit insurance services and applying information technologies in the insurance business.
Lietuvos Draudimas posted a consolidated audited net profit of 15.5 million litas ($3.87 million) for the year 2000.
According to the shareholder's report, the results were "very satisfactory," although considerable resources have been used on new IT solutions and a restructuring of the company.
According to data provided by the Lithuanian State Insurance Supervision Service, Lietuvos Draudimas had a 46 percent share of the domestic non-life insurance market, some 60 percent of the credit insurance and 83 percent of the life insurance market.
Balta has a 20 percent share of Latvia's non-life market and 31 percent of the life insurance market.
Codan's further development plans in the Baltics also envisage operations in Estonia, a Codan executive said.
Executive director Jens Erik Christensen said Codan wanted to work in Estonia too but wouldn't in the near future because it did not yet see an appropriate company in Estonia it could acquire.
"It is very important to have the biggest market share when we enter a market," said Christensen. "But we are keeping our eyes and ears open concerning any possibility which could show up in that country."
The present leader of the Estonian non-life insurance market is Sampo Eesti Varakindlustus, while Hansapanga Kindlustus is the leader among life insurance companies.