Here we are. The much-feared systemic risk was avoided: a lifesaver was thrown at Eurovita, which was in perilous waters Intesa Vita, Generali, Poste, Unipol and Allianz. In other words, the sector has taken on the insurance risk and the costs associated with the integration of the business unit, including the absorption of related personnel. All this putting on the plate a total value estimated at 500 million.
Now the word passes to the Boards of Directors of the five companies involved who must deliberate the agreement for approval by Thursday, the 30nd June, the date on which the term of the is based Redemption block imposed by IVASS, the Bank of Italy's insurance supervisory authority.
From the Newco to the unpacking: here are all the steps of the Eurovita rescue
The scheme of the operation provides that the newco formed ah hoc come on big five insurance companies (Intesa Vita, Generali, Poste, Unipol and Allianz) take over the company for a symbolic amount and subsequently proceed to unpack the business into 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 brand would disappear, while policy subscribers would find themselves holding a contract with Generali or with Unipol, Allianz, Poste or Intesa, obviously with all the guarantees that this entails.
Eurovita: freeze on redemptions for a few more weeks
Post the signature, the Redemption block it could last for a few more weeks, just to properly organize the entire process of the operation and bring together the portfolio of approximately 1 billion euro of policies currently held by Eurovita under different banners. The Insurance Supervisory Authority had placed the company, which specializes in the Life branchin extraordinary administration after the shareholder Cinven, a British investment company, had refused to pay new capital, with the solvency ratio below the danger level. The blocking of redemptions was imposed to prevent the "run to the bank" scenario experienced by some banks (see for example Svb in the United States). In the case of the insurance company, the fear is the "race for redemption" by its 353.000 customers, with 413.000 policies.
The knot of small banks is dissolved: the big ones become "guarantors"
For weeks, all the actors involved had been looking for the correct way to organize the rescue. The dowel which made it possible to unblock the situation was the consent given by big banks to do from "guarantees"At small banks who distributed Eurovita policies in their branches. Among these are Banca di Piacenza, Banca Popolare di Puglia and Basilicata, but also Mps and Credem.
So if a customer were to decide to ask for the redemption of the policy, the institutions would have to take over the contract and bring it to maturity, benefiting from any return and repayment of the capital.
But upstream there is the crisis in the Life Sector. The alert launched by Signorini
This is the first time such an operation has been attempted in the Life sector. But the risk of a negative reputational effect for the entire market is clear, especially at a time when life insurance policies suffer from competition from other higher-yield products (in particular from BTPs, BoTs and deposit accounts). According to data released by Ania, Life policies closed the first three months of 2023 with negative net inflows of €4,8 billion, down by more than €10 billion compared to the first quarter of 2022. In particular, in the first quarter of the year the companies recorded (premiums collected) equal to 25 billion which, however, did not offset the outgoings (payments for surrenders, annuities and claims due dates) equal to 2 billion.
The president of Ivass Luigi Federico Signorini in its annual report it has lit more than one beacon on the insurance sector, starting with the liquidity risk on which "the attention of the companies and the supervisor has been raised", given the drop in the solvency index above all due to the Life branch. The picture is rather complex and suggests that attention should be maintained, although overall the risks appear to be adequately managed. .
