German supervisor BaFin announced yesterday that it “has found no reasons to forbid” the sale of Generali Leben to Viridium.
In a press release, BaFin confirmed it had closed the ownership control procedures started last year when Generali announced it wanted to sell its life insurance business, which is worth €41.5bn, to run-off platform Viridium.
In an unprecedented move, the German financial supervisor issued a press release after the sales announcement to reassure the public.
Now, “after intensive examination”, the supervisor said “it has assured itself [that] the interests of the policyholders are sufficiently safeguarded”.
BaFin said that, while such a deal was in principle a business decision, the regulator had to “be convinced that the buyer had the structures and plans in place to continue and develop the business”.
As reported, representatives of Generali and Viridium had declared at the Handelsblatt conference in Berlin last week they were “confident” the deal would go through “before the summer”.
It is the largest run-off deal for Viridium since it started operations in Germany in 2014. It is also the first deal for Viridium to involve occupational pension contracts on a large scale.
Viridium will have to find a new name for the newly acquired business, as Generali has not granted permission to use its name.
The Generali Leben business includes 550,000 individual occupational pension contracts.
Boost for ‘run-off’ businesses
German employers are obliged to offer a pension plan for employees, known as Entgeltumwandlung, in which to defer parts of their salary, if such a solution is requested by employees.
Many employers offer these plans through occupational pension direct insurance contracts (Direktversicherung). Generali had sold these via its life insurance subsidiary, Generali Leben.
Generali will still take on new occupational pension business through its subsidiary Dialog Lebensversicherung.
BaFin’s approval of the Generali-Viridium deal is a major boost for the run-off business model, which has been the subject of much scepticism in Germany.
Consumer groups have previously warned that customers might be worse off under the new owners.
Speaking at the Handelsblatt conference last week, Heinz-Peter Roß, CEO at Viridium Holding, said he thought more insurers would look into selling closed business branches – most of which contain contracts with high interest rate guarantees.
“The low interest rate environment has led insurers to focus more on their existing portfolios,” he said.