2014 key facts
Highlights on the main events of 2014
Actions for the optimization of the debt and for the strengthening of financial solidity
In January, Assicurazioni Generali issued a senior bond for a total amount of € 1,250 million, underwritten for approximately 90% by foreign institutional investors. The issuance proceeds were used to refinance part of the Group's senior debt maturing in 2014, amounting to € 2,250 million, in line with the Group’s funding strategy. In May and November, senior bonds were reimbursed for € 1,500 million and € 750 million, respectively, thus reducing the senior bond for € 1 billion through internal resources.
In April, Generali placed a fixed rate 12-year subordinated bond for an overall amount of € 1 billion. The issuance, paying a 4.125% coupon, was directed to institutional investors; the demand was 7 times higher than the amount placed on the market. The issuance was used to both strengthen the regulatory capital position following the non-eligibility of the € 500 million subordinated loan issued in 2008 and reimbursed in April 2014, and to refinance the senior debt due in 2015, at a lower cost for the Group.
Assicurazioni Generali announced in early November a buyback operation on three hybrid bonds. Such operation, covered by a new issuance, aimed to efficiently refinance the Group’s debt maturing between June 2016 and February 2017, in line with the objective of reducing interest expenses over the next years in order to optimize its regulatory capital structure.
Recognitions by rating agencies for the strategy aimed at improving the Group’s economic and capital strength
In February, the rating agency Fitch affirmed the Insurer Financial Strength rating of Assicurazioni Generali at A- and on 2 May it upgraded Generali’s outlook from negative to stable. The agency confirmed such rating in July and it also reaffirmed the Company’s senior and subordinated notes at BBB+ and BBB-, respectively.
In October, the rating agency A.M. Best upgraded Assicurazioni Generali’s outlook from negative to stable and confirmed its Financial Strength rating at A (Excellent). The rating demonstrates the Group’s strong business position, sound operating performance and increasing capitalization, while the outlook upgrade reflects the stabilization of the Italian macroeconomic and financial scenario and the success of Generali’s strategic plan.
In late March, the rating agency Standard & Poor's affirmed its A- rating of Generali, thus resolving the credit watch initiated following last year’s review of the evaluation criteria linked to government debt securities (“Rating Above the Sovereign”).
Generali passed S&P's stress test, clearly demonstrating its ability to maintain a positive solvency even in a highly distressed scenario. In December, S&P’s downgraded the rating of Generali to BBB+ from A- as a consequence of the downgrade of the sovereign Italian rating. The outlook was revised from negative to stable. In 2013 S&P's changed its global evaluation criteria, thus limiting the rating of Generali to two notches above that of Italy. The rating agency also stated that the indicative Group Credit Profile (GCP) remains unchanged at A confirming “the very strong business risk profile and upper adequate financial risk profile”.
Actions for the strengthening of capital position and focus on the insurance business
In April, Generali became the first Italian sponsor to enter the Insurance Linked Securities (ILS) market through the first ever 144A indemnity catastrophe bond placement on protection against European windstorm. This innovative transaction allows Generali to optimize protection covers against catastrophic events deriving from European windstorms. The success on capital market has allowed the protection provided to Generali to be upsized to € 190 million with a fixed premium of 2.25% per annum and to extend it to 3 years.
In May, the resolution taken on 4 December 2013 by the extraordinary General Meeting of Generali Deutschland Holding AG (GDH), approving the squeeze-out of GDH 's minorities, was registered with the German Commercial Register. After the registration of the shareholders’ resolution, all the shares held by the minority shareholders in GDH were transferred to Assicurazioni Generali and, at the same time, the shares of GDH were delisted. This transaction resulted in a reduction in the equity of the Group of € 130 million.
In June, Generali completed the sale of 100% of Fata Assicurazioni Danni S.p.A. for a total amount of € 194.7 million, after a price adjustment procedure, thus allowing the Group to further strengthen its liquidity and capital position and to improve the Solvency I ratio by 0.7 percentage points. The transaction resulted in a non-recurring gain of € 56 million.
In June, Generali approved the demerger from Telco S.p.A.. The Group will complete the demerger as soon as the necessary authorization are received. The demerger from Telco is in line with the Group's strategy to actively manage its assets.
Generali signed an agreement to sell its entire interest in the BSI Group to BTG Pactual for a total of € 1.24 billion in July. This operation allows a greater focus on the core insurance business and helps improve the Solvency I ratio by approximately 9 percentage points. Pending the release of the necessary regulatory approvals, since June 2014 the participation in BSI Group is classified as a disposal group held for sale. Following the operation, BSI had a negative result of € 208 million at year-end.
At the end of July, the Group reached an agreement with Allianz to become sole owner of Citylife S.p.A. through the acquisition of the remaining 33% of the company that manages the largest urban development project in Milan. Citylife has also reached a binding agreement with the institutions financing the project to redefine certain terms and conditions of the original deal.
In November, Generali entered into a European partnership – the first of its kind in Continental Europe – with the insurance company Discovery for the launch of “Vitality”, an innovative platform of Health & Protection insurance solutions. Vitality is an insurance model - designed by Discovery - based on behavior and shared value. It has the aim of making the people healthier through a customized and regular interaction with the client in order to encourage and reward a healthy lifestyle. The development phase of the Generali Vitality products has already begun and the forecasted exclusive distribution will be launched in Germany, France and Austria and will then be extended to the other countries where the Group operates.
In December, Generali has entered into an agreement with Multi-Purpose Capital Holdings Berhad - a wholly owned subsidiary of the Malaysian group headed by MPHB Capital - to acquire a 49% stake in its P&C insurance subsidiary, Multi-Purpose Insurance Berhad (MP IB), for a consideration of € 81.4 million (MYR 355.8 million). Thanks to this take-over, the Group enters into the Malaysian market establishing itself among the ten biggest P&C insurance players of the country. The operation is essentially neutral in terms of Solvency. Generali immediately appoints various Board members and key managers of the Malaysian company.
In October, the independent Board member Paolo Scaroni resigned as Chairman of the Remuneration Committee and member of the Appointment and Corporate Governance of Generali, and Sergio Balbinot resigned as Group Chief Insurance Officer of Generali.