ROMANIA – Two of Romania's pension funds – claiming nearly a sixth of the second pillar's business – have merged, following the purchase of Aviva's Central and Eastern European (CEE) business by MetLife.
Last summer insurance group Metropolitan Life (MetLife) purchased Aviva's business in Eastern Europe, including Aviva Life Czech Republic, Aviva Life Hungary and Aviva Life Romania, which ran the second pillar fund Pensia Viva.
MetLife already owns Romanian insurer and pension fund provider Alico, purchased from US-insurance giant AIG in 2010.
The Supervisory Commission of the Private Pension System (CSSPP), Romania's regulator, gave final approval for the merger of the pension funds run by Aviva and Alico at the end of last week.
Pensia Viva was merged with Alico and saw its market share in the second pillar increase from 6.8% to 14% with a total of 822,420 participants, according to a statement by the CSSPP.
At year-end 2012, more than 5.7 million participants were enrolled in the second pillar with net assets amounting to RON 9.64bn (€2.18bn) in nine funds.
Since 2008 the number of pension funds has now halved to eight funds following several mergers, the CSSPP noted.
Marian Sarbu, president of the CSSPP, commented on the mergers: "As long as it does not affect the competitiveness of the system, this process is beneficial to maintain a stable market."
He added pension funds get "bigger and stronger" as a result of the mergers, allowing them to "benefit from the economies of scale principle".
The head of the authority noted that the market could "expect other mergers and acquisitions transactions, as part of a natural process", as pension fund managers could decide to further restrict their business on an "international, regional or local level".
In 2012, the funds in the Romanian second pillar returned 10.5%, having invested almost 94% of assets in domestic securities, while the remainder was invested in other EU member states' bonds.
According to the CSSPP the net profit for pension fund members since the inception of the system was RON1.7bn compared to their gross contribution.