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. Last Updated: 07/27/2016

Insurer's Capital Boost May Hit Shareholders

The country's second-largest insurer, Ingosstrakh, said Friday that it had decided to quadruple its charter capital in a move that could dilute the interest of one of the company's major shareholders, which is believed to be the Czech Republic's PPF Group.

The insurance sector is growing rapidly, and foreign companies have been gaining greater presence, with Germany's Allianz buying 96.5 percent of Rosno recently. But Ingosstrakh appears to be betting on solo performance in a market worth $22 billion in premiums last year.

Kremlin ally Oleg Deripaska directly owns 10 percent of Ingosstrakh and controls a further 50 percent. PPF is believed to have bought 38 percent in the company from businessman Alexander Mamut earlier this year.

Alexei Bechtin, a spokesman for PPF, on Friday denied that the Czech firm owned any shares in Ingosstrakh. "PPF Group has no shares in Ingosstrakh," he said by telephone from Prague.

Sixty percent of Ingosstrakh shareholders voted for the increase of the company's charter capital at an Oct. 8 meeting, Ingosstrakh said in a statement Friday, Interfax reported. The proportion is the same as that controlled by Deripaska.

Three companies listed on the Ingosstrakh web site as shareholders complained to the Federal Service for Financial Markets that they had not been informed about the shareholder meeting, RBC Daily reported Friday. The companies said they represented PPF Group.

A spokeswoman for the financial markets service said Friday that she could not immediately verify the report.

Ingosstrakh will raise its charter capital from 2.5 billion rubles to 10 billion rubles ($100 million to $400 million) to "build up its financial power," the company said in a separate, e-mailed statement. All shareholders registered as of Aug. 22 will be able to subscribe to the additional 7.5 billion shares proportionately to their existing interests, it said. The shares have a face value of 1 ruble each, but the company did not name the actual selling price.

If PPF does not buy any new shares, its ownership will drop to 9.5 percent. PPF could run into trouble meeting Ingosstrakh corporate rules if it decides to purchase the shares, warned Khalil Shekhmametyev, chief analyst at financial company Otkrytiye. Alternatively, the Czech company could ignore the offering, he said.

Deripaska may have disagreed with PPF on the future of Ingosstrakh, Shekhmametyev said. PPF may be denying its ownership of a stake in Ingosstrakh to avoid clearing it with the Federal Anti-Monopoly Service, he suggested.

"The insurance market is very opaque," Shekhmametyev said.

Mamut could not be reached for comment Friday.

Calls to the press office of Deripaska's holding company Basic Element went unanswered.