Acrisure's takeover of Bulgaria's SDI faces in-depth probe

In its initial enquiry, the regulator reached the preliminary view that the planned transaction may lead to a substantial lessening of competition in the Bulgarian mortgage market, the Commission on Protection of Competition (CPC) said in its decision to launch an in-depth probe published earlier this week.

Acrisure sought approval to acquire SDI Group in September. Through Unilink, the buyer already controls Bulgaria's I&G Insurance Brokers and its subsidiary Finance Market.

The proposed transaction will curb competition between the two biggest insurance brokers in Bulgaria, partly in the context of a lack of new entrants to the local market between 2020 and 2022, the CPC said. Moreover, the takeover could hinder market innovation, because SDI Group offers exclusive products in partnership with leading insurance companies.

During the past two years, the bulk of the revenue generated by the two parties to the deal was formed through the same insurance companies -- Dall Bogg: Zhivot I Zdrave, DZI General Insurance, Bulstrad Vienna Insurance Group, Bul Ins and Lev Ins, the CPC noted.

In terms of market shares based on premium income in 2022, SDI Group was the top insurance broker with a 7.99% market share, whereas I&G held 7.62%, out of 324 brokers active in Bulgaria, according to data in the CPC's statement. The two closest competitors, the local subsidiary of US insurance company Marsh McLennan, and Amarant Bulgaria had market shares of 4.14% and 3.84%, respectively.

Based on last year's performance, the combined entity would have a significantly larger market share than the closest competitors in travel insurance, of 23.13%, and of 25.73% in civil liability insurance for motor vehicles.

"The consolidated market share of the parties to the concentration will significantly outweigh that of the other key market participants, having in effect the potential to lead to market concentration and a substantial advantage over other competitors," the CPC said.

Acrisure, which was founded in 2005, entered Poland, Bulgaria, Romania, the Czech Republic, Slovakia and Moldova through the acquisition of Unilink Group in April.