Deal continues Italian insurer’s disposal of non-core assets

Pensions Insight

The Generali Group has signed an agreement with Grupo Financiero Banorte to sell its 49% minority stakes in the Mexican companies Seguros Banorte Generali and Pensiones Banorte Generali for a total gross consideration of $857.5m.

Through this transaction Generali reaches more than €2.2bn ($2.9bn) from the disposals since August 2012, corresponding to over half of the 2015 target of €4bn.

Earlier this month, Generali agreed to sell its US life reinsurance business to SCOR SE’s Global Life.

Total expected gross proceeds of $920m comprise an estimated cash consideration from SCOR of $780m at closing (including $30m of estimated profit) and the release of $140m of collateral.

The latest transaction follows the acquisition proposal made by Banorte, which held a 51% stake in the two companies and controlled the distribution.

The deal generates a net capital gain for Generali of approximately €500m on a consolidated basis, further strengthening the group’s liquidity and capital position with an improvement of four percentage points to its Solvency I ratio.

“We seized Banorte’s offer at the best conditions for us and withdrew from a minority position which was no longer consistent with Generali’s current strategy to manage its invested capital actively,” said Generali’s group chief executive Mario Greco. “Latin America remains a very attractive market for Generali; we therefore are interested in developing our business in the region, in particular in the Brazilian market.

“The disposal of the minority stakes we held in Mexico is attractive from a financial point of view and allow us to strengthen the group’s capital position, one of our strategic goals. Through this transaction we have already achieved more than half of our disposal plan which we remain confident of completing within the previously communicated plan period.”

Seguros Banorte Generali operates in the life and P&C segments mainly through bancassurance, in addition to traditional channels. The disposal of the minority stake in Seguros Banorte Generali contributed $637m to the total gross consideration.

Pensiones Banorte Generali operates in the social security related life annuities segment. It contributed $220.5m to the total consideration of the deal.