The times are getting longer rescue di Eurolife and therefore could in all likelihood slip it release of redemptions of policies initially set for 30 June. According to numerous press reports, the desire to find a solution "as soon as possible" for the Eurovita crisis is shared "by all parties involved", i.e. banks and insurance companies, but there are still many issues to be resolved given the complexity of the operation and the large number of actors involved.
Hypothesis postponement of release of Eurovita redemptions: what happened?
The Insurance Supervisory Authority has placed the company specializing in the Life business in 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 solution was adopted by IVASS to avoid an uncontrolled outflow of capital which could have jeopardized not only the company but the entire sector.
A new date has not yet been defined and the hypothesis of a postponement, already postulated, has not found confirmations (according to La Stampa it could be a month if not even three), but the freezing it could probably be postponed given that in recent days (Wednesday 17 May) the last meeting to discuss the details was once again postponed to a date to be defined. And the hypothesis of a further extension could have negative repercussions on the 353 customers of the insurance company, holders of over 400 policies for 15,3 billion in assets, given that the freeze on redemptions has been in force since February.
Eurovita: what the bailout plan provides
The insurance company would be split between the big five of the sector (Intesa Vita, Generali, Poste, Unipol and Allianz) which should take over the Eurovita portfolio. On the other hand, the banks distributing the policies (Fideuram, Credem, Fineco, Sparkasse) are called upon to provide guarantees on the advance redemptions requested by customers once the policies have been thawed. An operation that risks being expensive for banks with interest rates soaring. But even the division into five equal parts of the separate management of Eurovita is far from simple given that a portfolio of over 1 billion euros is at stake.
To try to close the transaction more quickly, the banks have called in Vitale as a consultant, while the extraordinary director Alessandro Santoliquido avails himself of the advice of Kitra.
Life policies, inflows in the red for 4,8 billion in the first quarter of 2023
It is the first time that an operation of this kind has been attempted and there are no precedents 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 they suffer from competition from other higher-yield products (in particular from BTPs, BoTs and deposit accounts). According to data released by Ania, Life policies have closed i first three months of 2023 and with a collection net negative for 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 income (premiums collected) of 25 billion which however did not offset the outgoings (payments for surrenders, annuities expiring and claims) equal to 2 billion.
In addition to the contraction in the volume of premiums (-3,8% compared to the first three months of 2022), which mainly concerned class III policies, the total amount of outflows (+48,7%) weighed, mainly determined by the higher amounts redeemed on class I policies, i.e. on the so-called "revaluable", amounting to 15,4 billion euro.
