Italy discusses break-up rescue for Eurovita – sources

MILAN (Reuters) – Italian authorities and financial firms on Wednesday discussed plans to rescue Eurovita by dividing up the troubled life insurer among leading players in the industry, two people close to the matter said.

Under the scheme, top insurers Generali (BIT:), UnipolSAI, Intesa Sanpaolo (OTC:), Allianz (ETR:) and Poste Italiane would each take on a piece of the Cinven-owned insurer, the sources said.

The companies involved declined to comment or were not immediately available for comment.

Under the ownership of the British private equity fund, Eurovita grew rapidly in recent years, distributing its products through several dozen banks.

It ran into trouble when higher interest rates reduced the value of its government bond holdings and also prompted customers to redeem their insurance policies early to reinvest the money into higher-yielding products.

Cinven’s unwillingness to recapitalise the insurer hastened redemptions, the Bank of Italy wrote its in Financial Stability Report last month, eventually prompting authorities to take over the insurer and freeze redemptions.

As of the end of March, redemptions in Italy’s life sector amounted to 119% of premiums for life insurers that rely on banks and financial advisers for their distribution, the Bank of Italy said.

Cinven eventually agreed to a 100 million euro ($110 million) capital injection, but Eurovita needs a total of at least 400 million euros, sources have previously said.

Discussions are ongoing and the insurers that have been called upon to help would also like to get banks that have been distributing Eurovita’s products involved in the rescue.

Any solution is still a long way away, two industry sources said.

Poste Italiane CEO Matteo Del Fante said last week the solution for Eurovita would see the Italian post office, which is a major life insurer, and other players “use their balance sheet”, without elaborating.

($1 = 0.9084 euros)