Generali goes shopping in Spain and consolidates in Europe. The Leone company has reached an agreement to purchase the insurance company Liberty Insurance from Liberty Mutual. The transaction, carried out for cash, is valid 2,3 billion euros, a figure that includes all of Liberty Seguros' excess capital that "will deliver significant financial benefits," the insurance group reads.
The acquisition of Liberty Seguros and Generali's estimates
The operation, underlines the company led by Philippe Donnet, is "a rare opportunity", but it is also consistent with the strategic plan "Lifetime Partner 24: Driving Growth" and will allow the group to grow further, strengthening its positioning in the P&C business in Spain (fourth in the country) and Portugal (second) and enter Ireland and Northern Ireland.
From the transaction, the company expects to generate economies of scale through cost reduction, optimization of IT systems, cross-selling of Generali products and also thanks to the Group's proven track record in integrations.
“Liberty Seguros' digital distribution skills represent an important accelerator for development of the group's strategic initiative relating to a multi-country platform for the direct channel”, underlines Generali who estimates a impact on the Solvency Ratio of the group equal to approximately -9,7 percentage points.
What Liberty Seguros does
Liberty Seguros is a Spanish insurance company operating in Spain, Portugal, Ireland and Northern Ireland. It has a solid capital position, with a Solvency Ratio above 330% as at 31 December 2022.
The acquired company has over €1,2 billion of premiums issued in 2022 and is mainly focused on P&C, with a growing auto business and a diversified product mix, approximately 1.700 employees and 5.600 intermediaries in the three markets in which it is active. The company operates through agents, brokers and direct channels, as well as distribution agreements and bancassurance partnerships. Furthermore, the initiative aims to leverage on skills developed by Genertel to define a digital offer in the P&C retail business, focused on the auto business, ensuring continuous interaction with customers.
The acquisition is subject to regulatory approvals, as required for transactions of this type. Citigroup and Credit Suisse acted as financial advisors; Clifford Chance, Morais Leitao and Matheson as legal advisors to the transaction.
