Assicurazioni Generali in July 2018 sold an 89.9% stake in Generali Leben life insurance to a partnership which includes Viridium Gruppe and Hannover Re. Viridium is owned by London-based private equity firm Cinven (80%) and global German reinsurer Hannover Re (20%).
Generali Leben is valued at up to € 1 billion, including €125 million as earn-out in case of changes in the rules regulating the allocation to ZZR1 technical reserves. Viridium will also reimburse €882 million of hybrid loans to Generali Group.
Generali will keep a seat on the supervisory board of Generali Leben as well as a 10.1% stake with put and call options that can be exercised starting from three years after closing.
Generali continues to move away from business with exposure to interest rate risk.
The transaction will improve the return on risk capital and will reduce Generali’s exposure to interest rate risk. The transaction will add approximately 43% to the German and 2.6% to the Group’s Solvency II positions respectively, and generate a capital gain (before tax) of approximately €275 million at Group level.
Generali Leben represents approximately 36% 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.
After the transaction, Generali Deutschland will remain a leader in the Unit-Linked, Hybrid and Protection business and will maintain its position as the second largest German insurer, through the other business units of the group.
Furthermore, Generali will manage the financial assets of Generali Leben for a 5-year period through Generali Investments Europe for a cumulative fee of €275 million.
Generali will have an option to invest in a minority stake in Viridium.
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