UK-based private equity firm Cinven has made a €100m capital infusion in the Italian life insurance firm Eurovita, reported Reuters.
The development comes after the life insurer was placed under temporary administration by the insurance regulator, IVASS, last month.
Eurovita’s solvency ratio took a hit due to the volatility in the bond market last year and an increase in the number of customers seeking to pull their investments from the company.
Last year, the Italian insurance regulator asked Cinven to recapitalise Eurovita, but the fund postponed the investment in the hopes of successfully selling the company.
IVASS put the business under temporary administration after the sale to rival private equity group JC Flowers failed due to the lack of a willing reinsurer.
The temporary administrator appointed by the Italian insurance regulator IVASS to oversee Eurovita has stated that it was still working on strategies to increase the insurer’s capital reserves.
“As a first important contribution … Eurovita Holding SpA has received a capital contribution of 100 million euros … from its shareholder,” the administrator was quoted by the news agency as saying.
Although the exact amount is unknown, a person with knowledge of the situation claimed that Eurovita would probably require around four times as much money in total to rebuild its buffers.
Eurovita has put a stop to early insurance policy redemptions until the end of March to stop the outflow of funds.
According to sources cited by Bloomberg last week, banks such as Natwest, ING, Bank of America, and BNP Paribas are in the process of writing down debts totalling around $300m to Eurovita.
Earlier this week, Cinven-backed Swedish insurance broker Säkra bought Brookfield Underwriting.