Specialising in managing life insurance portfolios in Germany, Viridium Gruppe is owned by London-based private equity firm Cinven and German reinsurer Hannover Re.
Generali Leben represents about 36% of Generali Deutschland’s Life reserves. The company is mainly focused on the guaranteed traditional policy business.
The transaction values Generali Leben at up to €1bn with the total estimated cash-in likely to be approximately €1.9bn.
The transaction comprises €125m as an earn-out in case of changes in the reservation rules. Viridium will reimburse €882m of hybrid loans to the Generali Group.
Generali will continue to hold a 10.1% stake in Generali Leben and a seat on the supervisory board, while Generali Investments Europe will manage the Generali Leben assets for a five-year period, receiving a cumulative total fee of €275m.
Generali will also have the option of buying a minority stake in Viridium subject to the successful completion of the due diligence.
Generali Group CEO Philippe Donnet said: “Today’s decision represents a key step in the process of strengthening Generali according to our strategy. All of our stakeholders will benefit from it.
“This transaction will allow us to invest in innovative solutions for our German customers, guaranteeing a higher return for our shareholders.
“Germany is a core market for Generali. The management team and all of our colleagues are working relentlessly to strengthen our position as a leader in the insurance industry. This commitment makes us confident about our future in the market.”
Upon completion of the transaction, around 300 employees of Generali Leben will be absorbed by Viridium.
Earlier in June, Generali signed an agreement with India-based diversified conglomerate Future Group to increase its stake in the Future Generali joint ventures (JVs) to 49% from existing 25.5%.