Generali says goodbye to Türkiye. The insurance company of the Lion has in fact reached an agreement for the sale of its assets in the country. An operation, the company explains, that will have a “negligible impact on the Solvency II ratio”. The news initially boosted the stock, with the General shares which in the morning gained over 1%, before falling back and settling just above parity at mid-day (+0,12% at 25,83%)
Generali sells its operations in Türkiye
Under the terms of the agreement, Generali will sell 99,99% of its stake in Generali Sigorta to four different companies: Kiler Holding (42% of the share), Ekol Girisim Sermayesi Yatrm Ortaklg (9%), Arex Yatrm Holding (48%) and Arex Sigorta (1%).
The operation, explains the company led by Philippe Donnet in a note, is “fully in line with the strategic plan” which plans to “pursue sustainable growth and improve the group’s earnings profile, focusing on insurance markets where Generali has a leadership position”.
From an economic point of view, the contribution of the activities in Türkiye to the group's operating result is defined as "marginal". Furthermore, "the operation will have a 'negligible impact' on the Solvency II ratio of Generali, the company communicates.
The sale is expected to be completed in the first half of 2025 and is subject to approval by the relevant authorities.”
From Goldman Sachs “buy” on Generali
Another piece of news arrived this morning: Goldman Sachs has resumed coverage of major European multi-line insurance companies, seeing a positive trend of diversification and downside protection that multi-line companies can provide. Looking at Italy, the US investment bank has now a “Buy” recommendation on Generali, with a target price of 31,5 euros per share. According to Gs, in fact, "Generali's life business will benefit the most from the easing of ECB interest rates. Over 60% of Generali's new business comes from Italy and France, which are the two markets where the declines have been most pronounced. Compared to its peers, Generali also faces greater competition from non-insurance savings products such as those offered by banks and BTP Valore.
Il interest rate decline In the short term, this should help alleviate short-term downside concerns and increase the competitiveness of Generali’s new offering, while stable long-term rates should help Generali maintain its investment margin. Generali has one of the fastest growing contractual service margins (or future profit reserve) among multi-lines, and Goldman Sachs’ 2025 and 2026 new business estimates are about 10% above Visible Alpha Consensus data.
