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Generali Said to Seek $1 Billion for U.S. Life Business

Generali Said to Seek U.S. Life Reinsurance Sale for $1 Billion
The headquarters of Assicurazioni Generali SpA are seen in Trieste. Photographer: Joze Suhjdolnik/ Bloomberg

Assicurazioni Generali SpA plans to seek a buyer for its U.S. life reinsurance business as Chief Executive Officer Mario Greco works to restore the profitability of Italy’s biggest insurer, people familiar with the process said.

Generali has hired Citigroup Inc. to advise on a sale of Generali USA Life Reassurance Co. and the unit may be worth $800 million to $1 billion, said the people, who asked not to be identified because the process is private. Sales documents are being prepared and could be sent to potential buyers as early as next month, they said.

Greco said this month that he is working on a business plan to restore profitability and strengthen capital. In June, Generali’s main investors ousted the company’s then CEO, Giovanni Perissinotto, after the insurer’s profit fell for four consecutive quarters. Last year, net income slumped 50 percent to the lowest level since 2002, and the insurer’s stock sank to an almost two-decade low on May 31.

“I would expect that major reinsurers, including Munich Re and Hannover Re, would take a look, if the portfolio focused on biometric risks and excluded investment risks,” said Roland Pfaender, a Frankfurt-based analyst with Commerzbank AG.

Officials at Generali, Citigroup, Munich Re and Hannover Re declined to comment.

Pooling Risks

Life reinsurers help underwriters like MetLife Inc. and Prudential Financial Inc. pool risks, such as the risk of higher-than-expected death rates.

Generali USA Life Re rose to No. 2 in the U.S. ordinary recurring reinsurance market in 2010 from No. 5 in 2009 as competitors cut back on new business, according to a November 2011 report from Munich Re for the Society of Actuaries.

The Italian company had $78 billion in assumed business in 2010, or a 15.4 percent market share, trailing only the Reinsurance Group of America Inc., which had 26.3 percent of the market, according to the report.

Scor SE of France agreed last year to buy the mortality risk reinsurance business of Aegon NV’s Transamerica unit for $912.5 million. Hannover Re, Germany’s second-biggest reinsurer, agreed in 2009 to take over Scottish Re Group’s business of reinsuring U.S. life-reinsurance policies written by ING Groep NV.

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