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Generali/Intesa M&A speculation; Munich Re to restructure life, health divisions


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Generali/Intesa M&A speculation; Munich Re to restructure life, health divisions

S&P Global Market Intelligence offers our top picks of insurance news stories and more published throughout the week.

Generali/Intesa M&A speculation

* A landscape-shifting potential acquisition of Italy's largest insurer by its second-largest bank dominated headlines throughout the week. Italy's La Stampa first reported the potential deal over the weekend, suggesting that Intesa Sanpaolo SpA could take part in an acquisition of Generali by Allianz Group and AXA. Generali responded by acquiring the voting rights of 505 million shares, representing 3.01% of the lender's share capital, through a securities lending transaction, effectively blocking Intesa from acquiring a stake of less than 60% in the insurer. Intesa then said it was examining various possibilities for expanding its own business, including an acquisition of Generali.

Intesa's board was due to meet Jan. 27, although CEO Carlo Messina said the day before that a Generali deal would not be up for discussion. He also said he sees "room to grow" in tie-ups between banks and insurers.

* Meanwhile, Generali CFO and General Manager Alberto Minali will step down effective Jan. 31. He had reportedly clashed with CEO Philippe Donnet since the latter's appointment in 2016.

Industry trends

* Aon Plc's Aon Securities expects primary catastrophe bond issuance to approach $8 billion in 2017, a sharp rise from 2016's $5.8 billion. During the fourth quarter of 2016, the ILS market saw five catastrophe bond transactions worth $2.4 billion, the company noted.

* The U.K. Financial Conduct Authority released figures for 38 insurers that pay out claims most infrequently. The data highlighted that UIA (Insurance) Ltd. and Zenith Insurance Plc had the lowest claims acceptance rates for home insurance. Esure Group Plc had the lowest acceptance rate for personal accident insurance sold, while data for the year to Aug. 31, 2016, showed that, on average, Hiscox Syndicates Ltd. pays out the largest claims for home insurance. Brit Syndicates Ltd. pays out the most for home emergency insurance, according to the figures.

* Zurich-based catastrophe insurance data provider PERILS estimated that losses for the series of earthquakes that hit central Italy between Oct. 26 and Oct. 30, 2016, amounted to €125 million, up from an initial loss estimate of €31 million in December 2016.

Munich Re to restructure life, health divisions

* Munich Re will disband its Munich Health division, effective Feb. 1, and merge the latter's reinsurance units with Munich Re's life division. The primary health insurance business will be transferred to ERGO Group AG's ERGO International AG, in line with the planned strategic reorganization of ERGO International, scheduled for the first half of 2017.

European insurers launch ops in India

* Swiss Re Ltd. and XL Catlin received permission from India's Insurance Regulatory and Development Authority to set up branches in Mumbai. Swiss Re's branch will open Feb. 1 and be known as Swiss Reinsurance Co. Ltd., India branch. XL Catlin's operation in the country will be a branch office of XL Insurance Co. SE.

Deal updates

* PZU SA and Poland's development fund, Polski Fundusz Rozwoju, signed an agreement covering the terms of their cooperation after completing the purchase of a major stake in Bank Pekao SA from UniCredit SpA.

* The Ontario Municipal Employees Retirement System agreed to contribute $1 billion in financing toward Fairfax Financial Holdings Ltd.'s pending acquisition of Allied World Assurance Co. Holdings AG, Bloomberg News reported.

Personnel moves

* Admiral Group Plc's nonexecutive chairman, Alastair Lyons, will not seek re-election as a director of the company at its April 26 annual general meeting. Lyons' successor will be announced once regulatory approvals are received, according to Admiral.

* Aon's group president and the chairman and CEO of Aon Risk Solutions, Steve McGill, has stepped down, Artemis reported, citing a company memo.

* Aktia Pankki Oyj Deputy Managing Director Carl Pettersson will leave the lender to join Finland-based Veritas Eläkevakuutus Oy, or Veritas Pension Insurance, as managing director.

Featured during the week on S&P Global Market Intelligence

Politics seen driving Intesa/Generali deal amid regulatory, financial questions: Analysts are in doubt about the wisdom of a potential merger between Generali and Intesa, while suspecting that local political pressures are playing a part in Intesa's decision-making.

Blockchain could slash settlement times for reinsurance contracts: Blockchain technology could reduce the time taken for insurers and reinsurers to settle premiums and claims, although a reluctance by firms to give up control of processes could hinder its adoption.