Following the transfer of the 70% stake on the Bulgarian Stock Exchange in Insurance and Reinsurance JSC DZI, a public company under Bulgarian law, the acquirer KBC Insurance launched a tender offer addressed to the minority shareholders of DZI to purchase their shares. The tender offer was approved by the Bulgarian Financial Supervision Commission in the end of August 2007.

Bulgaria is a brand new EU-member since 1 January 2007 and is a perfect fit in KBC’s investment strategy regarding Central and Eastern Europe, because of its high growth in the retail and SME/corporate banking and insurance segment and its attractive macro-economic and stable legal and political environment.

KBC, which is the first Belgium financial institution investing in Bulgaria, has assessed the growth potential of the Bulgarian insurance sector and believes there are very attractive opportunities in this market, for non-life and life. DZI is a unique platform for KBC to enter this promising market, thanks to its leading and longstanding presence in the country and its well-developed nationwide multi-channel distribution network. DZI is the clear market leader both in non-life and life insurance and a highly respected and recognized brand in Bulgaria. This will allow DZI to compete effectively with international insurance companies active on the Bulgarian market.

Insurance and Reinsurance JSC DZI was created as a state insurer in 1946 and has 60 years of experience, knowledge and understanding of the markets and customers in all insurance segments. DZI is a well established, respected and widely recognised brand (a true household name) in insurance in Bulgaria. Building upon its longstanding presence and expertise, DZI has managed to maintain its leading position on the Bulgarian insurance market both in non-life and life insurance, with market shares of 18% and 29 % respectively (at the end of 2006), and this despite the significant presence of international competition, which started in the late nineties.

DZI, having market capitalisation of BGN 727 million (as per 16 August 2007) is the sixth largest public company in Bulgaria. DZI focuses on the retail business, holds strong and stable positions especially in motor insurance (which accounts for 75% of non-life premium income) and has a well diversified life insurance portfolio. The insurer has experienced significant growth (2005-2006 GWP growth of 0.22 % in non-life and 21% in life insurance), with total gross written premiums amounting to BGN 242 million (EUR 124 million, 77% for the non-life and 23% for the life business, as per 31 December 2006). The company also enjoys healthy profitability (2006 ROE + 24%, with a combined ratio for the non-life business of 97% in 2005).