It becomes the fourth property and civil liability (P&C) insurer in Spain
15 ()
Generali has closed an agreement to take over Liberty Seguros, which groups the insurer’s operations in part of Europe, for 2,300 million euros, and for which Generali becomes the fourth property and civil liability insurer in Spain, according to reports informed both companies in separate communications.
The agreement contemplates the sale of Liberty Seguros SA, based in Madrid and which centralizes operations in Spain, Portugal, Ireland and Northern Ireland. Other segments of the company (Liberty Specialty Markets, Liberty Mutual Reinsurance, Liberty Mutual Surety, Liberty IT and Hughes Insurance) are not included in the agreement.
Thanks to this operation, Generali will strengthen its position in the auto and home insurance market and will become the fourth property and civil liability insurer in Spain and will consolidate the second position in Portugal. In addition, it will enter Ireland, placing itself among the top ten companies in the market, as well as in Northern Ireland.
The amount of 2,300 million euros includes all the excess capital of Liberty Seguros, subject to adjustments at the closing of the operation.
Generali expects that the impact on the solvency ratio will be approximately -9.7 percentage points and recalls that Liberty Seguros has a “solid equity position”, with a solvency ratio of more than 330% at the end of December 2022.
With this purchase, Generali expects to generate economies of scale through cost reduction, optimization of technological systems, cross-selling of its products and thanks to the history of integrations that the Italian insurer has already carried out.
“Liberty Seguros’ digital distribution competencies are an important accelerator of the development of the group’s strategy regarding a multi-country platform for the direct channel,” Generali said.
Liberty Seguros is the largest subsidiary outside the United States of the insurer, with premiums of 1,235 million in 2022, about 1,700 employees and about 5,600 intermediaries. It closed 2022 with a profit before taxes of 381.4 million euros, which meant a six-fold increase in the profits of the previous year, although 126 million were for extraordinary items due to the simplification of the Solvency II subgroup in Europe.
Last year, the insurer signed long-term bancassurance agreements with Bankinter and Kutxabank. The alliance with Bankinter allows Liberty to exclusively market its home and automobile insurance through the bank’s branches in Spain and Portugal. In turn, the renewal of the agreement with Kutxabank allows the alliance they maintain for car and business insurance to be extended for another 10 years.
It ended last year with 3.5 million customers and around four million policies. Of the total premiums, 66% are automobile policies, the company’s main line of business, 14% are home policies, 9% are life policies and 5% are multi-risk policies.
“Our Liberty Seguros employees have done a tremendous job serving our customers, brokers, agents, partners and communities, building a profitable and respected business,” said Liberty Mutual President and CEO Tim Sweeney.
“This decision will help Liberty sharpen the operational focus on achieving exceptional value in our channels, products and markets,” he added.
BUSINESS IN SPAIN, PORTUGAL AND IRELAND
Generali explains that the acquisition will allow it to reach new customer segments in Spain thanks, among other things, to the bancassurance agreements that Liberty has in the country, in line with the characteristics of the local market and expanding the multi-channel approach of the Italian group.
In addition, its network of agents and brokers will be expanded to 7,000 intermediaries, making it one of the largest in Spain, according to the insurer.
In Portugal, it will strengthen its automobile, home and accident business lines, as well as its network of agents. Generali recalls that already in 2020 it acquired Seguradoras Unidas and AdvanceCare there, which allowed it to become the second largest player in the Portuguese property and liability insurance market. In addition, in 2022 it reached an agreement to enter the capital of Banco CTT to distribute the products of its subsidiary Tranquilidade.
In Ireland, the operation marks its first entry into the property and casualty retail business, ranking among the top ten operators, thanks to intermediaries and direct channels.
The acquisition is subject to regulatory approvals, as is required for transactions of this type. Generali reports that Citigroup and Credit Suisse have acted as financial advisers, while Clifford Chance, Morais Leitão and Matheson have served as legal advisers for the transaction.
