Published : 6 days ago, on 02/12/2024

By Rafal Wojciech Nowak

GDANSK (Reuters) -Poland’s top insurer PZU said on Monday it was considering selling its 32% stake in Alior Bank to Pekao, in which it holds 20%, as it seeks to simplify its structure under a new 2025-2027 strategy.

PZU and Pekao, Poland’s second biggest lender, have signed a letter of intent regarding the reorganisation, though no binding decisions have been made, the state-controlled insurer said.

The signing of a sale and purchase agreement, which is expected to include a cash settlement, is planned for the first half of 2025, it said.

The move would create value for shareholders through greater transparency and simplified group governance, PZU added.

If such a transaction were to take place, an additional profit would be generated on the standalone side of PZU, which if we referred to today’s valuations of the entity would end up with a value of more than 1 billion zlotys ($245 million),” PZU board member Tomasz Kulik said at a press conference.

“On the consolidated side, this transaction would be completely result-neutral,” Kulik said, adding that PZU would at least partially reinvest the funds to fulfil its strategic goals.

The insurer has no plans to increase its stake in Pekao at this stage, CEO Artur Olech said.

PZU has seen a positive impact from its bank holdings, both on its profit and through the cross-sale of banking and insurance products. Earnings from the banking activities added nearly 2 billion zlotys to its profit last year.

The group said it aimed to pay a dividend of at least 4.5 zlotys per share under its new strategy, with a 2027 net profit target of more than 6.2 billion zlotys. It also targets a return on equity exceeding 19% in the same period.

It aims to focus on its core insurance business, along with digitalisation and further expansion into the health sector, in which it wants to invest up to 1 billion zlotys.

“The strategy seems to be quite optimistic, ambitious,” Erste analyst Lukasz Janczak said, noting the financial targets were at least in line with the market consensus, and above it in the case of net profit.

As of 1228 GMT, PZU’s shares were up 4.1%, among the top gainers on Poland’s blue-chip WIG20 index.

($1 = 4.0780 zlotys)

(Reporting by Rafal W. Nowak;Editing by Milla Nissi)