Another step for the restructuring of their insurance activities in Greece and Cyprus was carried out by Eurobank and its major shareholder, Fairfax, as the sale and purchase agreement (SPA) was signed for the transfer of 45% of ERB Insurance from the bank to the Fairfax group.
On May 7, Fairfax and Eurobank signed an SPA for the transfer of 80% of Eurolife SAIF from the former to the latter, for a consideration of 813 million euros. On September 11, the second act followed for 45% of ERB Insurance.
More specifically, ERB Cyprus Insurance, a "granddaughter" company of Eurobank, is selling to Costa Luxemburg, which is controlled 100% by Fairfax, 45% of ERB Insurance Ltd, for a consideration of 54.8 million euros, which is paid in cash, subject to the usual adjustments provided for in the SPA.
The agreed consideration corresponds to a valuation multiple of 1.45x of book value (price-to-book value), which is the same as the multiple applied in the acquisition of Eurolife FFH Life Insurance Single-Member S.A. by Eurobank.
In the context of the financial evaluation of the transaction, various valuation methods were examined, including the dividend discount method (Dividend Discount Model), the valuation multiples of comparable listed companies (trading multiples) and the valuation multiples of comparable previous transactions (precedent transaction multiples).
Based on the above methods, the agreed consideration falls within the relevant valuation range. From a commercial and strategic point of view, the retention by the Eurobank group of a controlling 55% stake in ERB Insurance (ERBA), in combination with Fairfax's participation as a strategic partner, is expected, according to the bank, to support the further development and creation of long-term value for ERBA.
It is recalled that Fairfax has a long-standing presence in non-life insurance companies around the world.