The sale of the pension fund will improve the solvency ratio of Generali Germany by ten percentage points and that of the entire group by one percentage point.
(Photo: Reuters)
Frankfurt The German subsidiary of the Italian insurance group Generali is handing over its pension fund to a liquidation company. The approximately 150,000 contracts with 2.8 billion euros in investments are to be transferred to the portfolio manager Frankfurter Leben. Both companies announced this on Thursday.
Nothing will change for the customers. The contracts would be continued “in the best possible way in the interests of all customers,” said Stefan Lehmann, CEO of Generali Germany.
In the phase of low interest rates, life insurers and pension funds often found it difficult to generate the high interest rate guarantees that they had promised their customers. Selling the old contracts is an opportunity for them to focus on more attractive business. Today, many companies only offer policies with fewer guarantees or no guarantees at all. That ties up less capital.
Frankfurter Leben, based in Bad Homburg, specializes in taking over life insurance portfolios from other insurers and continuing them until they expire. Since buyers like Frankfurter Leben do not write any new business, they promise their customers a lower cost burden.
Generali Germany pension fund: Authorities still have to approve the takeover by Frankfurter Leben
So far, the company, which is owned by the Chinese conglomerate Fosun, has managed around 700,000 insurance contracts in Germany. The portfolio includes Frankfurter Lebensversicherung, which manages the former Basler Leben portfolio, and Frankfurt Münchener Lebensversicherung, which was originally active on the market as Arag Leben. In addition, Frankfurter Leben had also taken over the Pro bAV pension fund and the Prudentia pension fund.
The current transaction between Frankfurter Leben and Generali is expected to be completed by the end of 2023, subject to the approval of the financial regulator Bafin and the German antitrust authorities.
The Generali pension fund mainly concluded the contracts between 2003 and 2005. At the end of 2016, the company had stopped new business. “With this transaction, we are continuing on the path we have taken of consistently aligning our life insurance portfolio to products with less capital commitment,” said Lehmann.
Separation of pension fund: Generali Germany’s solvency ratio improves
The sale of the pension fund will improve Generali Germany’s solvency ratio by ten percentage points, the company said in a statement. This key figure indicates the ratio of existing to required own funds and shows whether an insurer could meet its obligations even in times of crisis.
The largest portfolio transfer to date in the German life insurance market was the sale of Generali Leben, now known as Proxalto, to the Viridium Group in 2019. This involved around four million insurance contracts.
Last year, the insurers Zurich and Axa also announced larger sales in Germany: Zurich wants to sell 720,000 contracts to Viridium, Axa about 900,000 policies to Athora.
More: Viridium also wants to take over smaller life insurance portfolios in the future