Regulatory and Financial Red Flags Mount Over Piraeus–Ethniki Deal

11:19 28/4/2025 - Πηγή: Dikaiologitika

Reflecting the broad consensus among market insiders, it has been repeatedly noted that the sale of Ethniki Insurance by CVC Capital Partners Fund VII to Greece’s Piraeus Bank, at

a valuation of €600 million, amounts to a significant "gift" to the private equity fund. It represents an exceptionally favorable exit strategy for CVC’s investors, rather than a deal based on strong fundamentals.

At the same time, the acquisition risks undermining Piraeus Bank’s medium-term business plan for 2024, raising serious doubts over the dividend policy it had promised to its shareholders.

The transaction also raises significant concerns regarding competition in Greece’s banking and insurance sectors. Particularly in bancassurance — the sale of insurance products through banks — the distortions created by this deal are so substantial that regulatory scrutiny is almost certain. Approval by Greece’s Competition Commission and the European Union’s Directorate-General for Competition (DG COMP) is far from guaranteed under the current terms.

The full extent of the risk Piraeus Bank is taking on became clear with the recent publication of Ethniki Insurance’s Solvency and Financial Condition Report for 2024. The report highlights not only persistent weaknesses in the insurer’s financial structure but also reveals how these vulnerabilities worsened under CVC’s ownership, rather than improved. Now, these problems are being transferred onto Piraeus.

Ethniki’s solvency capital requirement (SCR) ratio — a key measure of an insurer’s financial health — dropped from 199% in 2023 to 188% in 2024. Without the use of transitional measures, the ratio would be even lower, falling to 154%. The company’s equity declined by 5.3% to €692 million, while eligible own funds for covering solvency requirements fell by 9.4%. Operating expenses increased sharply, rising 14.7% to €101.4 million, even before factoring in costs related to restructuring programs and voluntary employee exits, both of which continue to drag down profitability.

Investment income also took a hit, shrinking by €23 million due to weaker asset sales and investment valuations. Meanwhile, the company’s closed health insurance portfolio continues to generate losses, hampered by limited flexibility in adjusting premiums. Particularly troubling is Ethniki’s heavy reliance on transitional measures to bolster its solvency position — a support mechanism that is being phased out by 2032 and will shrink further in 2025, putting additional pressure on its financial strength.

As the saying goes, "facts don't lie." Taken together, it becomes clear that Piraeus Bank’s decision to acquire Ethniki Insurance was not driven purely by economic rationality. This reality is expected to become even more evident in the coming months.

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