Poland's government decided Tuesday to sell another 20% to 25% of the country's largest insurer, Powszechny Zaklad Ubezpieczen SA, or PZU, in a public offering.

The decision was a blow for pan-European insurance consortium Eureko BV, which holds 20% of PZU and had sought to increase its stake through the purchase of another 20% to 25% without a public tender. Eureko had submitted a bid of Zl1,165 ($262.39)per share, valid until the end of June. But the offer would have meant a change in the government's privatization strategy for PZU, which controls more than 55% of the domestic insurance market. The offer had also been criticized by Poland's political opposition and by independent economic institutions because it lacks a control premium. The State Treasury sold 20% of PZU to Eureko and 10% to BIG Bank Gdanski, Poland's sixth-largest bank by assets, last November for Zl3 billion ($718 million). The deal gave Eureko an option to purchase another 10% in the next stage of PZU's privatization. The Treasury Ministry had earlier announced that if it decided not to go ahead with the sale to Eureka,the stake would go on public offer at the end of this year or early in 2001. Five consortia have submitted bids to advise the state on the sale: Britain's Schroders and Bank Handlowy SA; ABN Amro Rothschild with Merrill Lynch & Co. and BRE Bank SA; HSBC and Pekao Bank SA; J.P. Morgan & Co. Inc. and SG Securities Polska; and CSFB and Fix Kelton with PKO BP SA. PZU shares are not yet publicly traded, but based on its annual written premiums, the PZU group is worth about Zl11 billion to Zl12 billion.