Tirana, 11 March 2016/Independent Balkan News Agency
By Edison Kurani
In Albania, the very first insurance company in the country, INSIG, underwent a repeated tender for the sale of all of its shares. In three previous occasions, the tender had failed.
This time, it seems that INSIG will have a buyer.
The tender failed three times before
The tender for the sale of INSIG has failed three times since 2007 when the process started. An American company offered 50 million USD, but then withdrew.
Last year, INSIG underwent an evaluation process. An auditing company examined the value of the shares of INSIG. At the end of the process, INSIG’s value was estimated to be 15,3 million Euros.
The rise and fall of INSIG
In the recent years, the company has lost lots of market share in the insurance market, at a rate of 15-20% a year.
Currently, INSIG no longer enjoys the status of strategic sector, as it was lifted by parliament in 2015. Rama’s government decided to privatize INSIG last year and to start with, it lifted it from the list of state owned companies classified as a strategic sector. Being a strategic sector requires an open international tender. As a result, the auction was led by the Albanian Agency of Public Procurement.
The company, which was once the only one in the market and which later survived to the market when private companies were born, currently controls only five percent of the market in Albania. However, the value of its assets is at least two times higher than the bid offered in the last tender.
In the 2000s, several illegal companies emerged in the insurance market while the socialist government of that time didn’t intervene to stop them. Later, the government decided to legalize the private companies, which since then, have constantly made oligopoly agreements with each other, they have shared the market in segments, accused of not respecting insurance contracts by not paying damages, etc.
INSIG’s sale-the last tender
The Insurance Institute is the first insurance company in the Republic of Albania, the shares of which are entirely owned by the Ministry of Economic Development, Tourism, Trade and Enterprise.
Initially, the Albanian government owned around 61% of the shares, while two international institutions, IFC and EBRD owned 19,5% each. Given that EBRD and IFC executed their right of selling the shares which expired at the end of 2008, INSIG is now 100% owned by the state.
The company deals in the domain of life and non life insurance. The company also operates in Kosovo and FYROM.
Four companies participated in the tender by offering 11 to 15 million euros.
The lowest bid was offered by Kastrati, a petrol company, along with Albsig, an insurance company. The other bid was from Balfin, a large company in Albania which owns many activities. The largest bid of nearly 15 million euros, was offered by Recovered Earth Technologies & Duraku and Eurosig, at an amount of 15,9 million euros or 17,6 million USD.
The winner has not been officially announced, but it is expected to be Eurosig, which in 2015 controlled 15,5% of the non life insurance products market.
The commission of the evaluation of offers says that it will assess the bids until 19 March 2016. The amount of the bid and the experience in the insurance market are expected to earn more points.
INSIG sparks political debates, Rama and Berisha speak
Former prime minister Sali Berisha considers the amount for the sale of INSIG as very low. According to him, the company is being sold at a much lower price than valued by international companies. He says that the sale is being made to benefit the government’s clients.
“INSIG is being sold today. How much? 15 million euros. Look at the evaluation of the international company BDO, one of the most powerful ones in Europe, which has valued the company at an amount of 38 million euros. The company will be taken by the government’s clans”.
Contrary to Berisha, Rama blames the government of the former right wing prime minister for the fall of INSIG’s value.
According to Rama, from a leader company, INSIG was reduced to a ghost company with less than 5% of today’s market.
“They reduced INSIG into a ghost company with less than 5% of the market. In a market which they turned into a jungle, they failed with the privatization three times”.
Rama also said that: “In Kosovo, the company nearly lost its license, because it was causing a hole. This is why the minister of Finance has intensively negotiated.” /ibna/