FONSAI INCREASE, 60 MILLION TO CONSORTIUM BANKS. CREDITS FOR 230 MILLION TO THE LIGRESTI HOLDINGS
Both Fondiaria-Sai and Unipol were suspended due to excessive reductions on the eve of the maxi capital increases which, overall, will lead to a request for 1,3 billion from the market in one of the most difficult moments in the history of the Italian financial market.
On the eve, however, a winner is already emerging in the tour de force of the Fonsai and Unipol increases starting from Monday: the guarantee consortium team.
The banks in the Fonsai increase consortium (Barclays Bank, Credit Suisse, Deutsche Bank, Mediobanca, Nomura, UBS and UniCredit) and Unipol, guarantor of unexercised savings shares, to split up to €60,4m in fees to secure €1,1bn recapitalization of insurer.
Commissions of approximately €36,4m will go to the underwriting syndicate and Unipol, equal to 4,8% of the value of the total market risk assumed (approximately €759m, net of the guaranteed by Premafin and Finadin). An "incentive fee" of up to €24m will then be paid to the guarantee consortium alone (and not to Unipol). To ensure coverage of the unopted Fonsai will therefore have to pay the guarantors a sum equal to, at most, 7,9% of the market risk. For the banks in the consortium, which with the incentive fee will collect approximately 51,7 million, the remuneration goes up to 8,9% of the guaranteed unexercised quota (equal to approximately 577 million).
From reading the prospectus, the details of the "request for information" emerge which Isvap notified to Fonsai and Milano Assicurazioni on 3 July relating to the claims reserves of the non-life branch. Which would present, on the basis of the assessments of the authority, a shortage in the reserves of the group for a total of 125 million euros (64 for Fonsai and 61 for Milano Assicurazioni).
Isvap has asked the two companies "to provide suitable documentation to understand how the reserves are built". Fonsai, while awaiting a punctual reply to the Supervisory Authority, underlines in the prospectus that he has conducted an energetic "reserve strengthening policy" in the 2011 budget, a policy which "prudentially" will continue in the future, as also demonstrated by the 50 million increase in reserves remaining in the first quarter of 2012.
In addition to the possible adjustments to the claims reserves at the request of ISVAP, among other elements of uncertainty taken from the Fonsai prospectus include: the earthquake in Emilia, the repercussions of the bankruptcy of Sinergia-Imco, the performance of premiums and the increase in surrenders in the life sector linked to the "conditions of uncertainty of the company". All of this, we read, could have a 'significant' impact on 2012 and lead to lower than expected results.
In the legal prospectus, Fonsai's credit position with respect to Sinergia and Imco, the Ligresti family holding companies declared bankrupt on 13 July, amounts to 230 million, gross of write-downs and provisions already made. The document also states that "the possible persistence of the conditions of uncertainty that have characterized the company situation and in any case the uncertainties associated with the integration with Unipol and the related impacts on the distribution networks could lead to a further worsening of premium income". In particular, in the life sector "the surrender trend shows an increasing trend compared to the corresponding period of the previous year", with the consequent economic repercussions.
