The European Bank for Reconstruction and Development (EBRD) has signed a loan agreement to lend $110m to support RESO Garantia in its acquisition of an equity stake in the Russian insurer, VSK in a move to advance the consolidation of Russia’s insurance sector.

The five-year loan will pave way to the creation of a new insurance group marking the first integration between two large, locally owned Russia insurance companies and the second-biggest insurer after Rosgosstrakh, in terms of premium income.

The number of insurance companies in Russia’s insurance market has reduced from more than 600 in 2009 to less than 500 in 2011with 55% of the market being controlled by top 10 insurers.

Earlier this year, new minimum capital rules were made effective to help accelerate the insurance sector’s consolidation.

RESO Garantia is the country’s fourth-largest non-life insurer in motor, property and voluntary medical insurance providing services to more than seven million corporate and individual clients in Russia.

The EBRD holds an equity stake of 6.32% in RESO Garantia.