Letter of Intent regarding Gjensidige’s acquisition of Länsförsäkringar’s operations in Latvia and Lithuania

Länsförsäkringar AB and the Norwegian insurance company Gjensidige Forsikring BA have signed a Letter of Intent regarding the final negotiations for an acquisition of Länsförsäkringar International, which operates non-life insurance operations in Latvia and Lithuania under the name Nordicia.

In 2007, the establishment commenced of Länsförsäkringar’s non-life insurance operations in Latvia and Lithuania. This establishment took place in record time and the business achieved premium income of about SEK 50 M in its first financial year. “Against the backdrop of the global financial trend, particularly in the Baltic countries, Länsförsäkringar concluded that there was a strong decline in the countries’ economies, which impacts customers’ tendency to purchase insurance. Combined with the prevailing outlook for economic development, this decisively changed the fundamental conditions for Länsförsäkringar’s investment. Our assessment is that we would not be able to achieve profitability in the operation in the medium term. Accordingly, alternative solutions were sought in order to follow Länsförsäkringar’s principal approach regarding risk control, focus on three core businesses and long-term management of customers’ money. The sale involves a marginal impact on earnings for 2009,” comments Sten Dunér CFO, Länsförsäkringar AB. A Letter of Intent was signed with Gjensidige regarding Länsförsäkringar’s divestment of Länsförsäkringar International. The parties have agreed not to disclose the purchase consideration. “Gjensidige is already established in the Baltic market with a solid and profitable business and has an explicit ambition of growing further in this market. Länsförsäkringar’s Baltic operations comply well with the Baltic strategy that we have for both the private and corporate markets,” says Petter Bøhler, Executive Vice President of Gjensidige’s international operations. Gjensidige’s intention is to continue to conduct and operate the business under the Gjensidige brand name.