Zurich and Viridium: Life insurance settlement at Bafin failed – economy

The financial regulator Bafin has stopped the takeover of 720,000 life insurance contracts from Zurich Germany by the processing specialist Viridium. The reason is Viridium’s ownership structure: the company is majority owned by the British investor Cinven. He is currently very unpopular with regulators in Europe after allowing his Milan subsidiary Eurovita to get into trouble.

Zurich and Viridium completed the deal in June 2022. With the contracts, provisions amounting to 20 billion euros should go to Viridium. The purchase price is said to have been 500 million euros.

The sale of life insurance contracts had become almost routine since Viridium took over Generali’s portfolio in 2019 Life insurance had taken over. The idea: With better technology and specialization in this business, the liquidator can reduce costs to the benefit of the customers, the former owners of the inventory release capital and can concentrate on new business with their teams.

In such a transaction, the financial supervisory authority carries out an ownership control procedure. She wants to ensure that the new administrators of the contracts are reliable and that the interests of customers are not harmed by them.

Viridium boss Tilo Dresig is in a tight spot

This is apparently not the case with the transaction that has now collapsed. Bafin has informed the companies involved that it would have to prohibit the takeover of the stocks if those involved formally initiated the ownership control procedure. Both sides then decided not to initiate proceedings and discontinued the project.

Viridium itself cites its ownership structure as the reason. The company said the acquisition “could not be carried out as planned given our current ownership structure.” Viridium is 70 percent owned by the London investor Cinven. Hannover Re holds 20 percent and Generali 10 percent.

The reason for the doubts is Cinven’s role in Italy. After liquidity problems, Cinven refused to provide its subsidiary Eurovita with necessary capital injections. The company is now being wound up by the Italian regulator and the holdings are being distributed between Allianz and four Italian life insurers.

Viridium boss Tilo Dresig is in a tight spot. Bafin will not approve any other transaction as long as Cinven holds the majority. Cinven had already been looking for a buyer for Viridium in 2023, but had met with little interest with an asking price of allegedly three billion euros. The current situation is likely to significantly reduce the price.