Generali to Acquire De Agostini’s Majority Toro Stake; $4.84 Billion Total

June 26, 2006

Italy’s largest insurer, Assicurazioni Generali SpA, has signed an agreement for the acquisition of a controlling shareholding in Toro Assicurazioni SpA from Italian publishing group De Agostini the current owner.

Initially Generali is paying €21.50 ($27.00) per share to acquire 100,921,692 shares in Toro, the equivalent of 55.5 percent of its equity capital, for a total of €2.139 billion ($2.688 billion). “De Agostini will also have the possibility to sell, and Generali the obligation to buy, up to a maximum of 18,184,188 more Toro shares, equivalent to 10 percent of Toro’s total equity capital, at the same price for a further maximum consideration of €385.5 million [$484.4 million],” the bulletin explained.

Generali added: “With the above elements having now been established, the parties will, within three weeks, negotiate the remaining terms and conditions of the final sale and purchase agreement. The transaction entails the subsequent launch of a mandatory public cash tender offer by Generali for the outstanding share capital of Toro. Generali’s Executive Committee has resolved to set the offer price for minority shareholders at the same €21.20 level recognized to the controlling shareholder. The total maximum consideration of the transaction will be €3.85 billion [$4.84 billion].”

Generali Group CEO Giovanni Perissinotto stated: “With the acquisition of Toro we are targeting a doubling of our share of the retail insurance market in Italy, achieving at the same time market leadership in the Italian non-life business. The organizational structure of our business in Italy today, based on unified support services, will allow the group to maximize the benefits of this transaction.
We have been able to move rapidly to seize this opportunity thanks to the reorganization of the Group’s financial structure as implemented over the past month. While this transaction completes the Group’s footprint in Italy, we will, of course, continue our strategy of seeking out value-creating opportunities in other markets”.

Acquiring Toro will significantly increase Generali’s Italian P/C market share from 15.6 percent to 22 percent. “The Italian non-life insurance market has become one of the most attractive in Europe in terms of margin and growth potential,” the bulletin noted. It also indicated that the Group’s operational and organizational structure in Italy will facilitate the efficient integration of the Toro Group. As a result, the transaction is expected to result in gross cost synergies of €180 million ($226 million) and revenue synergies of up to €70 million ($88 million] by 2009.

Generali plans to finance the purchase of Toro “using resources already available to the Group” and by the issue of a new hybrid bond. The specific breakdown is as follows:
— € 1.7 billion from resources previously allocated to a buy-back program of the Group’s own shares;
— € 700 million in resources not used in the previously announced buy-out of minorities in the Group’s subsidiary companies;
— € 1.2 billion derived from a new hybrid bond issue;
— € 255 million from existing resources.

Generali gave the following details concerning Toro:
It was, founded in 1833 and is listed on the Milan Stock Exchange. It has been controlled by the De Agostini Group since 2003. Toro Targa, Nuova Tirrena, Agusta Assicurazioni and DAS are also part of the Toro Group. Toro’s total premium income in 2005 was €2.821 billion ($3.544 billion) – up7.3 percent from 2004), of which €2.34 billion ($2.94 billion) was accounted for by non-life business. In 2005 Toro’s net profit was €334 million ($420 million, up109 percent on 2004) with a combined ratio of 95 percent.

“Toro’s business is focused on families and small and medium sized businesses and its 2.6 million customers are mostly located in North Western and Central Italy. Its distribution is based on an agency network (1,485 agents) that gives it nationwide coverage,” said the bulletin. It was ranked 10th in Italy for total premium income in 2005, and 5th in the non-life business with a market share of 6.4 percent. It ranked 20th in the life segment in Italy with a market share of 0,7 percent.”

Further details concerning the acquisition can be obtained on the Generali Website at: www.generali.com.

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