Italy’s Generali Moves to Become Cattolica Major Shareholder, Strategic Partner

June 26, 2020

Italy’s largest insurer Assicurazioni Generali SpA said it will become a major shareholder in Cattolica Assicurazioni SC and a strategic partner with Cattolica in several areas of mutual opportunity.

Generali said it has committed to becoming a major shareholder, acquiring 24.4% of Cattolica, through a reserved share capital increase for €300 million ($337.5 million), subject to the transformation of Cattolica into a joint-stock company.

Transforming Cattolica into a joint-stock company would be voted on at a Cattolica shareholder meeting on July 31. The transformation would take effect April 1, 2021.

The board of directors of Assicurazioni Generali, under the chairmanship of Gabriele Galateri di Genola, and the board of directors of Cattolica, chaired by Paolo Bedoni, have already approved the start of a strategic partnership between the two.

The deal calls for the issue of 54.054 million Cattolica shares to Generali at a price per share of 5.55 euros ($6.21).

Italy’s insurance regulator recently told Cattolica it needs to raise 500 million euros ($557 million) to cover for losses from the coronavirus crisis, which hit Italy hard.

Before this move by Generali, Warren Buffett’s Berkshire Hathaway has been the top investor in Cattolica with 9%.

In addition to the capital increase for 300 million euros, Cattolica plans to approve a second capital increase in option for all shareholders for a maximum value of 200 million euros ($224 million).

The agreed-upon partnership includes trade agreements “capable of generating immediate direct benefits and opportunities for the two groups” in four areas: asset management, internet of things, business health and reinsurance. The agreements are aimed at “leveraging Generali’s skills and capabilities in investment management, digital innovation and health services and allowing Cattolica to expand and improve the offer to its customers.”

Generali would offer Cattolica customers access to its telematic business for cars, homes, pets and businesses. It would Cattolica’s customers health services currently not offered by Cattolica. Also the two would collaborate on reinsurance, with Generali being the main partner in relation to a portion of the risks to be reinsured.

Amid rumors of possible takeover bid, Italy’s top insurer told shareholders in April that it is “very solid from an operational and financial point of view as well as in terms of capital and governance.”

Generali has been exploring various options, including the potential sale of certain units and a French life insurance portfolio.

Generali’s first quarter net profit fell 84.8% to €113 million (US$124 million) from €744 million (US$815.5 million) reported in Q1 2019, as a result of the impact of the COVID-19 pandemic on financial markets. The insurer posted a record operating result for 2019. Its 2019 operating result was 5.2 billion euros ($5.8 billion) , up 6.9% from 2018, helped by growth across all its businesses.

In February, Genrali signed a deal with U.S. insurance giant Nationwide to serve commercial insurance customers with global needs. The insurers have formed a joint venture called N2G to address the property/casualty insurance needs of multinational organizations with U.S operations as well as U.S.-based firms with multinational operations.

In January, Generali finalized the acquisition in Portugal of the insurer Seguradoras Unidas and the health services company AdvanceCare from Apollo Global Management Inc. for €600 million (US$670.1 million).

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