Five major insurance companies and 25 banks have reached an agreement to save Italian life insurance company Eurovita, in financial difficulties, from bankruptcy, the Italian insurance supervisor (Ivass) announced on Friday.
“Based on this agreement, Eurovita’s policies will be transferred to a new entity under creation, in which the five companies will participate,” namely Generali, Allianz, Unipol, Intesa Sanpaolo Vita and Poste Vita, according to the supervisor’s statement. . .
However, Ivass has extended until October 31 the freezing of reimbursements of insurance and capitalization contracts entered into with Eurovita. This freeze was implemented to prevent massive withdrawals by savers. “The extension is necessary to allow for the orderly transfer of policies” to the insurers participating in the bailout, says Ivass.
413,000 contracts worth 15,000 million euros
The five insurers will invest 500 million euros to become shareholders of the future company born from the ashes of Eurovita and then share the policies held by clients, a financial source told AFP. Eurovita has 353,000 customers who have signed 413,000 contracts for a total value of 15,000 million euros. The insurer distributes its products through approximately 6,500 financial promoters and more than 1,000 bank branches.
“The operation, which will take place in several successive stages” sends “a clear signal of confidence to the market and to Eurovita’s clients,” Intesa Sanpaolo Vita said in a press release. The banks that distribute its products, as well as six major financial institutes that act as guarantors, will make €1 billion available so that Eurovita can deal with early redemptions of policies, according to the Italian press.
Eurovita had been placed at the end of March by the government of Giorgia Meloni under “extraordinary administration”, that is, under supervision to develop a rescue plan and avoid bankruptcy. Previously controlled by the British investment fund Cinven, Eurovita had seen its economic solvency ratio fall drastically, after the depreciation of the bonds in its portfolio due to the rise in interest rates. Cinven had injected 100 million euros into the insurer in February, but experts estimated its capital needs at a total of 400 million euros, resulting in a deficit of 300 million euros.
Source: BFM TV
