State asking for EUR 110 million for Dunav Osiguranje – Excessive number of employees reducing company’s value

The Government of Serbia has defined the general price of EUR 110 million for the privatization of Dunav Osiguranje, Blic writes in today’s issue and adds that those in the know believe that, if the state opts for a sale, it will be able to get EUR 60 million at the most.

Namely, in evaluating insurance companies, European standards are implemented, defining the number of employees and a range of other parameters based on the height of the insurance premium. Under these criteria, Dunav has twice as many employees as the optimal number is, which considerably reduces its market value.

The audit house PricewaterhouseCoopers (PwC), which reviewed the state of the company on December 31, 2015, at the request of the Ministry of Finance, also warned of these anomalies.

The working version of their diagnostics was submitted to the management and the Government of Serbia, Blic writes and adds that the IMF was also notified of the state of the company. The IMF had requested for an independent audit company to perform the analysis before the end of November, so that the privatization strategy would be defined, under the condition that the sale should be completed by the end of 2017.

The government, however, is basing the evaluation of Dunav Osiguranje on considerably improved business results compared to previous years, also noted by the audit company.

According to those data, Dunav Osiguranje went from incurring losses of RSD 3 billion in 2014 to having a profit of RSD 1.1 billion in 2015. The value of assets also increased by 10.9%. This, as well as the company’s well developed network and property, in the government’s estimate, makes the company worth between 100 and 120 million dinars, explains the Blic source.

Dunav osiguranje a.d.o. Beograd

Vlada Republike Srbije

PricewaterhouseCoopers d.o.o. Beograd

Ministarstvo finansija Republike Srbije

Međunarodni monetarni fond-MMF Beograd

Dunav Osiguranje

Government of Serbia

privatization of Dunav Osiguranje

sale of Dunav Osiguranje

PricewaterhouseCoopers

PwC

Ministry of Finance

IMF