Allianz to sell $5 billion life insurance portfolio in Italy – sources


By Pamela Barbaglia

German insurer Allianz (ALVG.DE) is looking to sell a $5 billion portfolio of life insurance policies in Italy, sources familiar with the matter has said.

Europe’s biggest insurer has picked Goldman Sachs (GS.N) to run the sale of the closed life policies, which no longer accept new business but remain on an insurer’s books as premium paying policies, the sources said.

Allianz, which ranks as Italy’s fourth biggest life and health insurer, is facing pressures from rock-bottom interest rates and has decided to sell a series of Italian life policies which pay a 2 percent minimum interest rate, they said.

The portfolio — worth around 4.5 billion euros ($5.09 billion) — has drawn interest from London-based private equity house Cinven [CINV.UL], the sources said, adding that no deal was certain.

U.S. private equity fund Apollo, which initially expressed interest in Allianz’ closed-book, has now walked away from the negotiations, they said.

The deal could be worth around 200 million euros, two of the sources said.

Allianz and Cinven declined to comment. Spokesmen at Goldman Sachs and Apollo were not immediately available for comment.
Last year, Allianz said it was planning to divest chunks of its multi-billion euro portfolio of old insurance policies in international markets while refocusing on its domestic assets.
The German company’s decision to sell parts of its Italian life business comes amid a wave of consolidation in the life and pensions sector. Last year, rival Aviva (AV.L) clinched a 5.6 billion pounds ($8.05 billion) purchase of Friends Life, which had a strong focus on closed life books.

New European capital rules make it more capital-intensive for insurers to hold closed life insurance business on their books, encouraging consolidation.

Cinven has been on the prowl for insurance assets since the creation of an acquisition vehicle in 2014, known as Heidelberger Leben Group, which was launched in partnership with Hannover Re (HNRGn.DE) after their joint purchase of Skandia Germany and Skandia Austria, part of Old Mutual (OML.L).

In September, Cinven sold Britain’s Guardian Financial Services to Admin Re, part of reinsurance giant Swiss Re (SRENH.S), for 1.6 billion pounds.

Deutsche Bank (DBKGn.DE) is now considering strategic options for its British insurance unit Abbey Life, with Phoenix Group Holdings (PHNX.L), Britain’s largest consolidator of closed life funds, seen as one of its suitors.

(Additional reporting by Jonathan Gould in Frankfurt. Editing by Jane Merriman)

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