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Polish state-controlled insurance giant PZU is "in the final straight" to seal the acquisition of Lithuanian peer Lietuvos draudimas, sources claim. If successful, it would be the first deal of a regional expansion push that PZU has struggled to get off the ground.

PZU is close to agreeing a purchase of Lietuvos draudimas from UK group RSA in a deal valued at around €100m, unnamed sources told Reuters on April 14. Last month Lithuanian media reports said the Polish company was in a fight with regional player Vienna Insurance Group for the asset, but that PZU had offered better terms.

"PZU is close to agreeing the purchase. Official information may follow soon," one source said. "The deal is in the final straight", another claimed. PZU, which operates in Lithuania via its subsidiary PZU Lietuva, declined to comment.

The Polish group has been on the lookout for acquisition targets for years as it struggles to find growth opportunities at home. It said in 2012 that it could potentially spend up to PLN13bn (€3.1bn) to expand and build an international presence. It set out to hunt for targets in Central Europe and the Balkans, as well as keeping an eye out for opportunist buys from troubled European financial groups.

However, despite that huge war chest it has little to show for its efforts, with hardly any large insurance assets having been put up for sale. CEO Andrzej Klesyk reiterated in May that "east of Berlin and west of Moscow" is the focus. However, none of the "players" on those markets will want to give up their stakes lightly, and privatisation in many has already been completed, he complained.

The latest flop came in December, when PZU was outbid for Croatia Osiguranje by local tobacco and tourism group Rovinj Adris. Klesyk had suggested his company would seek to use the Croat group as a launch pad for the Balkans. With Slovenia facing a desperate need for cash, it's likely that it could privatize insurer Triglav in the coming months. However, PZU could now also be out of that race.

"Anyone who buys Croatia Osiguranje will be interested in Triglav," Klesyk commented in May. "It makes sense. Then they will look to the south." PZU looks to be trekking north instead.

PZU CFO Przemyslaw Dabrowski told Reuters in March that the struggle to find large targets has forced the Polish company to reconsider its acquisition hunt. ""We have to revise our strategy. It's a question of whether we say OK, and stay with the opportunistic approach, or whether to realise the strategy of smaller buys and organic growth. It (the latter option) is an alternative today," he said.

The company has been expanding its presence in the Baltics via its local unit. PZU Lietuva got the green light to cover clients in Estonia and Latvia in 2012. The troubles of RSA - last month it announced plans for a GBP773m (€936m) rights issue as it bids to restore its capital position - potentially offers PZU further opportunity to short circuit growth in the region.

According to local press reports in late March, RSA had been investigating various options to spin off Lietuvos draudimas, including selling it to an investment fund with an option to buy it back in the future. However, the sources now suggest it is ready to sell to a strategic investor. The British company also controls Latvian market leader Balta - for which PZU is said to again be battling Austrian VIG, as well as Germany's Ergo - and RSA Estonia.