Generali sees synergies in Czech venture in 2009

...about 50 million euros ($68.07 million) in cost savings and revenue gains by 2009.

Generali announced on Thursday a preliminary agreement with PPF to form a venture to control Ceska Pojistovna, the biggest life and non-life insurer in the Czech Republic.

The agreement, which Generali plans to finalise in the coming weeks and close in the second half of the year, will turn it into the leading sector player in central and eastern Europe, a region where it expects a lot of growth.

Generali will pay 1.1 billion euros of its own cash for 51 percent of the venture and put in its assets in the region.

Moody's said the deal would not hurt its "Aa3" rating for the Italian insurer.

"Moody's noted the good strategic fit between Generali's and PPF's insurance operations, enabling Generali to improve access to developing CEE (Central and Eastern European) insurance markets and distribution channels," it said in a statement on Friday.

At 0839 GMT, Generali's stock was virtually flat, up 0.3 percent at 33.74 euros, near a year high of 34.42 euros.

In a slide presentation, Generali said it estimated gross cost savings of 50 million euros and revenue gains of 30 million euros from the venture by 2009.

"We will leverage our economies of scale in the Czech Republic and Slovakia," co-Chief Executive Sergio Balbinot told analysts on a conference call.

Balbinot also said the venture would be open ended.

"We hope to work (together) for some considerable time," he said.

In case of an eventual disagreement over the venture, Generali could resort to a call option and PPF a put option to dissolve it, he said, adding an initial public offering could also be an option.

Ceska Pojistovna is fully owned by investment group PPF, held by financier Petr Kellner, the country's richest man.

Pojistovna, a former communist-era insurance monopoly, has seen its market share erode over the past year as competition grows.