The price of this massive sale has remained undisclosed, but it has moved Cinven up a notch in Italy’s industry.
Munich Re has now agreed to sell its Italian insurance company, Ergo to a British private equity investor, Cinven, which has been working to boost the size of its position as an insurer within Italy’s industry.
The agreement means that Cinven will be acquiring both the life and property-casualty businesses.
Early this week, Ergo stated that the insurance companies it would be selling would be Ergo Assicurazioni and Ergo Previdenza. Combined, their premiums come to an estimated €360 million (approximately $383 million). The insurer is also selling its Ergo Italia Direct Network of agents, as well as its Ergo Italia Business solution service company. These are all being sold for an undisclosed amount of money.
Cinven has already stated that it was looking to consolidate the insurance company ecosystem in the country.
Its intentions are to consolidate the opportunities that are available in the insurance industry in Italy and it plans to use an organic growth strategy for Ergo by way of acquisitions within the bancassurance environment.
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At the moment, the insurance companies that were sold were rated in 30th place for property-casualty and 29th in the life insurance coverage market, according to Ergo’s data in a statement it has recently released. The statement added that “The sale is a further step in Ergo’s reduction of traditional life insurance business with guaranteed products.”
Regulators in the European Union have been working to discourage companies in the insurance industry from offering savings products within the life category that guarantee interest rates. This type of strategy typically forces them to have to increase reserves in order to be able to compensate for the costs associated with those liabilities. This has also led a number of firms to step out of that segment of the market.
By the time of the writing of this article Ergo had yet to say whether or not it was planning to sell any more of the insurance company businesses. That said, a spokesperson did say that it was in a continual state of review in terms of its position in the market.