Important transaction in Germany for Generali which announced the sale to Viridium, a German giant specializing in life insurance policies controlled by Cinven and Hannover Re, of 89,9% of Leben. The market seems to like the news and in Piazza Affari the stock ranks among the best in the Ftse Mib (+1,3%) with an increase of almost 2% to 14,555 euros.
According to what was announced by the Trieste-based group, Leben has been valued "up to 1 billion" euros, a figure which includes a further gain of 125 million in the event of changes to the rules on additional technical reserves. “Furthermore – explains a note – 882 million of subordinated instruments will be repaid to the Generali Group”. Overall, Generali will collect up to 1,9 billion euros, a figure that will allow to improve the Return on Risk Capital and to mitigate the Group's exposure to interest rate risk. Not only that, based on forecasts, with the sale of Leben it will have an overall impact of around 43 percentage points on Solvency in Germany and 2,6 percentage points on Solvency II of the Group, generating a capital gain (before tax) of around 275 million at Group level. "The operation is in line with the Group's strategic objective of portfolio rebalancing," explains the group led by Philippe Donnet.
We recall that Generali Leben manages 36% of the Life reserves of Generali Deutschland, dealing with traditional guaranteed-rate policies.
With the sale of Leben, Generali informs us, “the Life business in Germany is rebalanced on Unit Linked, Hybrid and Protection policies. Generali is confirmed as the second largest insurance operator in Germany”.
Lastly, the Trieste group announces that “Contractual obligations towards customers remain unchanged, who will continue to benefit from the best service standards guaranteed by Viridium's expertise and by a Service Level Agreement entered into with Generali Deutschland. Generali maintains a stake in Generali Leben of 10,1% and a seat on the Supervisory Board”.
Philippe Donnet, CEO of Generali, described the operation as “a fundamental step in the strategic path that we have outlined to strengthen Generali. All our stakeholders will benefit from it, the operation will allow us to invest in innovative solutions for our German customers, guaranteeing a higher return for our shareholders. Germany is a key market for Generali: management and all colleagues are working with great determination to strengthen our position as a leader in the insurance sector. This commitment allows us to look to our future on the market with confidence".
