With a deal in hand between all the players in the case-Eurovita, IVASS, Bank of Italy's Insurance Supervisory Authority, will move the date for blocking redemptions to October, only to allow all the measures already decided to be grounded.
The blocking of redemptions, it should be emphasized, it concerns only Eurovita: this means that if in the meantime a policy changes to a new entity, as is in the plan, the surrender will still be possible. What is at the basis of this agreement is that the 350 holders of Eurovita policies they are safe and they won't lose a euro.
A bailout involving 350.000 subscribers, 31 banks, 5 insurance companies: an entire system
The scheme of rescue plan is the one indicated that bears the signature of 31 banks and 5 insurance companies.
Downstream of the decision to safeguard underwriters, but with them also the entire insurance system, there will be technical measures that will concern the relationship between insurance companies and banks and between large banks and small banks.
Over the last few days, 36 boards of directors between insurance companies and banks involved had to meet urgently to approve the plan.
Agreement that as is known the offer the establishment of one newco ad hoc by the five big insurance companies (Intesa Vita, Generali, Poste, Unipol and Allianz) and that it takes over the company for a symbolic amount. Subsequently, the business will be unpacked five company branches, all of the same size, which would be taken over at a later time by the big insurance companies called to the table. In this way, the company and the Eurovita brand would disappear, while the subscribers of the policies would find themselves holding a contract with Generali or with Unipol, Allianz, Poste or Intesa, obviously with all the guarantees that this entails.
Bank support with credit lines
Sure, even for the banking system it's not and it won't exactly be a joke because everyone will have to be able to be ready to pay any ransoms. Precisely for this reason, a key chapter of the agreement concerns the credit lines on two different levels: within a certain threshold, the distributing banks will directly prepare the credit lines, while if that percentage were to be exceeded, the largest banks that have declared themselves willing to act as "guarantors" will intervene in a pool. And it was precisely on this last point that the closing of the circle of protection was based.
The agreement will be made official later today, under the auspices of Ivass, the Bank of Italy and the government, by Commissioner Alessandro Santoliquido, which took over the management of Eurovita in March after the failed recapitalization by the controlling shareholder, the British fund Cinven.
The Eurovita case is the tip of an iceberg represented by the entire Life sector in crisis
This concludes a dramatic chapter that began in February when IVASS placed a receiver in Eurovita, the first receivership of a company exercising the Branch which in the collective imagination was considered risk-free.
Now he breathes a sigh of relief for the narrow escape. But the case-Eurovita risks being the tip of the iceberg represented by the whole Life Sector which is experiencing a deep crisis. Data Ania in hand, 2022 was already to be entered in the annals for the negative record of surrender flows of life policies in the last 10 years. And in the first three months of this year Life policies closed with negative net inflows of 4,8 billion, down by over 10 billion euros compared to the first quarter of 2022. In particular, in the first quarter of the year the companies recorded revenues (premiums collected) of 25 billion which, however, did not offset outgoings (payments for surrenders, annuities and claims due dates) of 2 billion. And the president of Ivass Luigi Federico Signorini in its annual report he has not spared alarms on the subject, while reassuring that there are adequate safeguards. Meanwhile, she is already looking ahead. Italian regulators, especially IVASS, are closely following the work of the European directive on the fund for the protection of policyholders, along the lines of the Fitd (Italian Fund for the Protection of Depositors). They are known as Insurance Guarantee Schemes (IGS).