Assicurazioni Generali SpA has agreed to sell some 90% of its German Generali Leben unit to Viridium Group, a company owned by Cinven Ltd. and Hannover Rein.
The deal’s total value could be as much as 1.9 billion euros including debt, Generali said.
The sale is part of the insurer’s strategy to improve the return on risk capital while cutting exposure to interest rate risk.
Generali expects to achieve a capital gain level of approximately €275m from the sale as well as an increase to its Solvency II ratio of 2.6 percentage points.
The German group by its part expects to achieve an increase to its Solvency ratio of 44 percentage points.
Under the terms of the agreement, Generali Investments Europe will manage the Generali Leben assets under management for a 5-year period, receiving a cumulative sum of €275m for the five years.
Generali plans to retain the remaining 10.1 percent of Generali Leben and to have a seat on the supervisory board.
The transaction will be subject to the regulatory approval by the German Federal Financial Supervisory Authority (BaFin).
Generali Group CEO, Philippe Donnet, said: “Today’s decision represents a key step in the process of strengthening Generali according to our strategy. All of our stakeholders will benefit from it. This transaction will allow us to invest in innovative solutions for our German customers, guaranteeing a higher return for our shareholders. Germany is a core market for Generali.”
The CEO of Generali Deutschland, Giovanni Liverani, added: “This is the final step in the strategic turnaround of Generali in Germany, which allows us to grow and be stronger in this market. We are committed to guarantee maximum continuity to our customers, opportunities for our employees, and further investments in growth.”
Viridium, a leading specialist for the management of life insurance portfolios in Germany, is owned by the international London-based private equity firm Cinven (80%) and the global German reinsurer Hannover Re (20%). The Group currently manages a portfolio of almost 1 million insurance contracts and assets of approximately €16bn.
Generali Leben represents approximately 36% of Generali Deutschland’s Life reserves and is mainly focused on the guaranteed traditional policy business. It manages 4 million policies with traditional reserves amounting to €37.1bn.