Austria's Vienna Insurance acquires Erste unit

VIENNA (Reuters) - Austria's Vienna Insurance Group (VIGR.VI: Quote, Profile, Research, Stock Buzz) said it would acquire all the insurance activities of Erste Bank (ERST.VI: Quote, Profile, Research, Stock Buzz) for 1.4 billion euros ($2.2 billion) and planned a capital increase to fund the deal.

"Vienna Insurance Group takes advantage of a unique opportunity to further implement its strategy for sustained growth in CEE (Central and East Europe). This transaction makes us the No. 1 insurance company among the international insurers operating in CEE," it said in a statement late on Wednesday.

It said the transaction was subject to regulatory approval and was expect to close in the third quarter of 2008.

"Erste Bank's insurance activities consist of two main entities: s Versicherung Group with operations in Austria, Czech Republic, Slovakia, Hungary and Croatia and BCR Asigurari Group with operations in Romania," the statement said.

s Versicherung Group comprises primarily life insurance activities, whereas BCR Asigurari Group has both life and nonlife

insurance, according to the statement.

A similar Erste Bank statement put the transaction at 1.445 billion euros.

Vienna Insurance said it already had a small stake in s Versicherung.

The two companies also agreed a distribution arrangement that Vienna Insurance said gave it access to Erste Bank's network with more than 16 million clients and more than 2,900 branches.