Generali SpA (G.MI) doesn't rule out the sale of a 40 billion euro ($47.1 billion) life insurance portfolio of Generali Leben as part of the reorganization of its German operations, the Italian insurer said Thursday. The company, based in the city of Trieste, said it would put its Generali Leben business into runoff --namely, it would honor its obligations on existing policies but not add new ones-- in the first quarter of 2018, paving the way for potential disposal. The move will improve the group's economic solvency, it said. UBS analysts estimate a sale of Generali Leben could generate between EUR700 million and EUR900 million in proceeds. In addition, in 2018, Generali's EVG network of 2,800 agents in Germany will be folded into an existing joint venture the company has with insurance agent network DVAG, in which it also has a stake.
"The runoff of Generali Leben will free up resources that will allow us to capture new growth opportunities in the German market," Chief Executive Officer Philippe Donnet said.
With gross written premiums of more than EUR16 billion, Germany is the second-biggest market for Generali after Italy. The move is part of the wider reorganization of Generali Deutschland, the second-largest primary insurer in Germany. The plan, aimed at strengthening operating performance, includes rationalizing the company's German portfolio, streamlining the operations and investing to develop its direct insurer CosmosDirekt.
Last year Generali outlined a plan to rejig its geographical presence by leaving less profitable markets to focus on core ones. As part of the plan, Generali agreed to sell its Dutch business Generali Nederland NV earlier this month. Generali expects the plan to generate at least EUR1 billion of cash by 2018.
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