Generali Sells Minority Stakes to Banorte for $857.5 Million

Assicurazioni Generali SpA agreed to sell minority stakes in Mexican businesses to Grupo Financiero Banorte SAB for $857.5 million as Italy’s biggest insurer seeks to boost capital.

Generali is selling its 49 percent stakes in Seguros Banorte Generali and Pensiones Banorte Generali to Banorte, Mexico’s third-largest lender, which holds the remainder, the Trieste, Italy-based company said in a statement today. Generali will book a 500 million-euro ($664 million) capital gain, boosting its Solvency I ratio by four percentage points.

Chief Executive Officer Mario Greco wants to boost profit and increase capital by disposing of certain assets, cutting costs and focusing on faster-growing emerging markets. The company, which set a goal of 4 billion euros of revenue from asset sales by 2015, exceeded 50 percent of the target with this sale, Greco said in the statement.

“We seized Banorte’s offer at the best conditions for us and withdrew from a minority position which was no longer consistent with Generali’s current strategy,” Greco said. “Latin America remains a very attractive market for Generali; we therefore are interested in developing our business in the region, in particular in the Brazilian market.”

Asset Sales

The Italian insurer is also selling its Swiss asset-management unit BSI Group as part of a plan approved in January, after completing the disposal of its U.S. reinsurance unit last week. Generali is in an “advanced stage” of selling BSI, Greco said last month.

Bankinter SA of Spain may buy BSI, CEO Maria Dolores Dancausa said in April. The firm offered 1.5 billion euros in partnership with U.S.-based Apollo Global Management, Swiss newspaper L’Agefi reported in March. Generali has said the unit has a book value of 2.3 billion euros.

Generali said June 4 it expects proceeds from the sale of its U.S. unit to Scor SE, France’s largest reinsurer, of $920 million, including the $750 million purchase price, $30 million of estimated profit and $140 million of released collateral. The company will book a $150 million capital gain from the sale, boosting its Solvency I ratio by about one percentage point.

The insurer, which expects higher total operating profit this year, reported first-quarter net income rising 6.3 percent to 603 million euros as non-life insurance earnings surged.

Generali, which has gained 55 percent in the past 12 months, fell 1.4 percent to 13.93 euros in Milan trading today giving the company a market value of 21.7 billion euros.