Poland, Eureko seek settlement in PZU insurance battle

WARSAW (Thomson Financial) - Poland announced today that it had begun talks with Dutch-based group Eureko to try to settle a long-running dispute over leading Polish insurance company PZU.

During a meeting in Warsaw, Polish Treasury Minister Aleksander Grad and representatives of Eureko officials agreed that they wanted to 'find an amicable solution' to nearly nine years of disputing over the Dutch group's stake in PZU.

The two sides have agreed to set up a task force that will set down the rules and timetable for further negotiations, a treasury statement said.

In 1999, Eureko bought a 30-pct stake in PZU for 3.1 bln zlotys, then worth some 694.5 mln eur. Its stake has since risen to 33 pct minus one share, but Eureko insists it is entitled to a further 21 pct under the terms of the privatisation contract.

Poland's treasury currently holds a 55 pct controlling stake in the vast company.

A string of Polish governments from both the left and right have fought Eureko's bid to take majority control of PZU, provoking a protracted legal battle for control over central Europe's largest insurance company.

In 2005, a London-based international arbitration court ruled in favour of Eureko, saying the Polish treasury had failed to uphold its side of the privatisation deal.

A Brussels-based appellate court also favoured Eureko in November, the same month that Poland's new pro-business government took office.

Shortly after taking the helm, Prime Minister Donald Tusk pledged that his government would 'look for ways and means to avoid a tragic end' to the dispute.

PZU made a net profit of 3.28 bln zlotys (886 mln eur) in 2006 and 1.12 bln zlotys in the first half of 2007.

Source: forbes.com