Generali to sell German life unit to Cinven, Hannover Re-owned Viridium

Italian insurer Generali has agreed to sell 89.9 percent of life insurer Generali Leben in Germany to Viridium Gruppe, which is owned by London-based private equity firm Cinven and German reinsurer Hannover Re.

The transaction values Generali Leben at up to €1 billion with the total estimated cash-in likely to be approximately €1.9 billion. The transaction includes €125 million as an earn-out in case of changes in the reservation rules. Viridium will reimburse €882 million of hybrid loans to the Generali Group.

The insurer said the transaction is in line with its strategic ambition of rebalancing its portfolio. Generali expects it to improve the return on risk capital and mitigate the group’s exposure to interest rate risk.

Generali said the deal will generate a capital gain of approximately €275 million at group level. Generali will also have the option of acquiring a minority stake in Viridium subject to the successful completion of the due diligence. Viridium is a specialist for the management of life insurance portfolios in Germany.

Generali Leben represents approximately 36 percent of Generali Deutschland’s Life reserves and is mainly focused on the guaranteed traditional policy business. It manages 4 million policies with traditional reserves amounting to €37.1 billion and includes several portfolios of formerly merged companies.

Under the terms of the agreement, Generali will manage the assets under management of Generali Leben for a five-year period through Generali Investments Europe.

Generali Group CEO, Philippe Donnet, said: “Today’s decision represents a key step in the process of strengthening Generali according to our strategy. All of our stakeholders will benefit from it. This transaction will allow us to invest in innovative solutions for our German customers, guaranteeing a higher return for our shareholders. Germany is a core market for Generali. The management team and all of our colleagues are working relentlessly to strengthen our position as a leader in the insurance industry. This commitment makes us confident about our future in the market.”

Giovanni Liverani, CEO of Generali Deutschland, added: “This is the final step in the strategic turnaround of Generali in Germany, which allows us to grow and be stronger in this market.

"We are committed to guarantee maximum continuity to our customers, opportunities for our employees, and further investments in growth. Leveraging on our longstanding and excellent distribution partnership with the Deutsche Vermoegensberatung that will distribute our strong Generali brand, on our digital leadership with CosmosDirekt, as well as on our innovative and unique smart insurance product range, we are now positioned better than ever to reinforce our footprint among the leaders in Germany.”

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