Generali parts with German pension fund to improve earnings

Italian insurer  Generali is selling its Deutschland Pensionskasse to a German firm, in a move to improve its earnings profile and reduce capital intensity.

Generali has reached an agreement to dispose of pension fund Generali Deutschland Pensionskasse AG (GDPK) to Frankfurter Leben.

It said the transaction is aligned with the company’s growth strategy to “enhance its earnings profile through continuous improvement in the profile and profitability of the life business, reducing capital intensity and enhancing operating results.”

The transaction will add approximately 10 p.p. to the German and 1 p.p. to the Group Solvency II positions respectively.

In 2019, Generali disposed of a majority stake in Generali Leben to improve the return on risk capital and mitigate the group’s exposure to interest rate risk.

GDPK, with circa €2.8 billion in capital reserves and 150,000 policies, was founded in 2002 as a specialised pension company. Its portfolio was mainly written in the years 2003-2005. At the end of 2016, new business in GDPK ceased.

The transaction is expected to be completed by the end of 2023, subject to the approval of the German Federal Financial Supervisory Authority (BaFin) and the responsible local antitrust authorities.

Goldman Sachs acted as financial advisor and Hengeler Mueller acted as legal advisor for the transaction.

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