"The owners of AIG-Israel never considered selling the company to Israel Direct Insurance," AIG-Israel's management announced today. AIG-Israel was responding to reports in today's press about negotiations toward such a deal.
In contrast, Israel Direct Insurance said there were recent negotiations to acquire AIG-Israel, a direct insurance company, and merge it with Direct Insurance. The negotiations were merely preliminary and nothing came of them.
A well-informed source told ''Globes'' today, "It appears that Direct Insurance's announcement is true, and there were talks between Direct Insurance chairman Moshe Shneidman and AIG, which is based in New York. AIG-Israel may not have been aware of these talks, and was not notified about them."
A senior source in AIG-Israel said, "The announcement that there were no negotiations was the result of our conversations with AIG in New York and our other shareholder, Aurec Israel."
Insurance industry sources believe the explanation for the contradictory statements by the companies is that Shneidman had approached AIG with an offer for AIG-Israel, but rejected it. These sources say that the Shneidman family would have had the controlling interest in the merged company, since its activities are much larger than AIG-Israel.
Direct Insurance's premiums and gross fees from all sectors totaled NIS 466 million in 2001, while AIG-Israel’s were NIS 217 million. Direct Insurance posted a net profit of NIS 21 million in 2001, while AIG-Israel posted NIS 2 million.
On the basis of these figures, there was reason for Direct Insurance to try to merge the companies with Direct Insurance having at least 67% ownership. AIG objected to this demand.
A Direct Insurance senior executive told ''Globes'', "There were talks that encountered the above mentioned difficulties, but on a scale of 1-100, I believe the chance of a deal was only two. The talks were meaningless."
Sources in AIG-Israel continue to contend there were never any talks.
Published by Israel's Business Arena on 11 April 2002