The deal is Rosgosstrakh‚Äôs first acquisition since it returned to profit after years of losses that helped cause the collapse of its parent company, Otkritie ‚ÄĒ which required Russia‚Äôs largest-ever bank bailout. The company did not disclose the size of the acquisition.
Ergo Life, a top-20 insurer in Russia which made Rbs129m in profit last year, will become a full subsidiary of Rosgosstrakh. Alexei Rudenko, formerly chief executive of state-run Sberbank Life Insurance, Russia‚Äôs largest life insurer, will run the new company, subject to regulatory approval.
The deal sees Ergo, Ergo Life‚Äôs parent, withdraw from a large sector of the Russian market as it consolidates. State bank VTB is finalising a deal to sell its insurance business to Sogaz to create the largest company in the sector by far, with Rbs550bn under management.
‚ÄúFor us the agreement is another logical step to further driving our international business optimisation strategy,‚ÄĚ Ergo chief operating officer Alexander Ankel said.
Rosgosstrakh will then return to the life insurance market after losing its division to former owner Danil Khachaturov during the complex bailout process last year. Mr Khachaturov agreed to sell Rosgosstrakh to Otkritie last year in exchange for a stake in the bank.¬†
Before the deal could be concluded, the company‚Äôs record Rbs55bn losses drove Otkritie‚Äôs investment rating down, prompting a run on the bank by depositors. The central bank then took over Otkritie to prevent what would have been Russia‚Äôs largest ever banking collapse.
Otkritie spent Rbs106bn last year recapitalising Rosgosstrakh. The insurer returned to health with a Rbs3bn profit in the first half of this year.
‚ÄúWe‚Äôve had no financial help since December and we sold our last toxic asset in the second quarter,‚ÄĚ Rosgosstrakh chief executive Nikolaus Frei said. ‚ÄúSo far we‚Äôre very pleased, because our target for this year was a black zero.‚ÄĚ¬†
Otkritie has said it plans to regain control over the former life insurance unit and is contesting its spin-off from the parent company. Evgeny Giner, the industrialist who owns CSKA Moscow football club, claimed this year that he secretly bought Rosgosstrakh Life in 2015 and allowed it to operate separately under the same name.
Rosgosstrakh is suing its former life insurance subsidiary for Rbs150bn for using the parent company‚Äôs brand. The new company changed its name to Capital Life last month. Rosgosstrakh is also seeking damages from its former owners and management over losses caused by deals made on the eve of the bailout.
Mr Khachaturov‚Äôs younger brother Sergei Khachaturov, a former deputy chief executive of Rosgosstrakh and owner of its bank, was arrested in April on charges of embezzling Rbs1bn from the company. He denies any wrongdoing.
This article has been amended to correct the spelling of Nikolaus Frei and the date of Mr Khachaturov‚Äôs arrest