Belgium's KBC has put up for sale Bulgarian insurance subsidiary DZI and the deal is expected to be concluded by the end of the year, according to local media reports.

KBC declined comment on what they have described as "rumors".

The reports emerge shortly after the banking and insurance group KBC sold its Polish insurance unit Warta to Germany's third-largest insurance company Talanx for EUR 770 M.

Talanx, which owns a 50.2% stake in the world's third-biggest reinsurer, Hannover Re, is also said to eye the acquisition of the Bulgarian insurer DZI.

The other potential bidder is Achmea, a large Dutch financial services company, part of the Eureko insurance group, according to the reports.

At the end of last year Belgian financial services group KBC raised its stake in the insurer to 95.75%, gaining the right to delist it from the Bulgarian bourse.

KBC launched a public tender offer on its Bulgarian insurance subsidiary DZI in Octover last year, when it held 90.35%.

The bid price was set at BGN 71 per share, while the maximum total consideration amounts to BGN 26.5 M (approximately EUR 13.5 M).

KBC bought the DZI shares on the Sofia bourse at BGN 71 a piece on November 30.

"The transaction fits within KBC's ambition to further implement its bancassurance business model in Bulgaria, while at the same time increasing corporate governance and optimising DZI's shareholder structure," the group said in a statement.

DZI, the former Communist-era state monopoly, is one of the leading companies on the Bulgarian insurance market, competing with the local unit of Germany's Allianz and Bulstrad, owned by Vienna Insurance Group.

KBC finalized the acquisition of 70% stake in Bulgarian insurer DZI Insurance from Bulgarian firm Kontrakt Sofia for EUR 185 M in the middle of August 2007 and launched shortly after that a public bid for the remaining minority stake.

As part of the deal, KBC also acquired DZI INVEST, a securities broker active on the Bulgarian Stock Exchange.

DZI Insurance was created as a state insurer in 1946 and has more than 60 years of experience, knowledge and understanding of the markets and customers in all insurance segments.

The insurer and the DZI Bank were part of the financial group built by banker Emil Kyulev who was shot dead October 2005.

His spouse Vesela Kyuleva has sold her majority stake in the bank to Greece's Eurobank EFG Ergasias for EUR 158 M.

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