Insurance that trembles with Eurovita

Latest news about Eurovita Insurance in exceptional management. Article by Emanuela Rossi

A few more months to save Eurovita, the insurance company owned by the English Cinven Fund since 2015 and which has been without a board of directors and statutory auditors since the end of January – suspended by IVASS – and which has been under exceptional management since the end of March under the guidance of Alessandro Santulequido.

current situation

On March 29, in fact, the Ministry of Enterprise and Manufacturing of Italy, on the proposal of IVASS, as expected, ordered the extraordinary administration and dissolution of bodies with administrative and control functions in exchange for Eurovita Holding and Eurovita . Alessandro Santolequido was appointed Commissioner of the Extraordinary Department. The supervisory committee that will accompany Santolequido in the recovery process has also been set up: Antonio Blandini as president, Sandro Panizza and Monica Beccari as members.

The next day, the Institute for Insurance Supervision extended until 30 June the following suspension of assignment of insurance and capitalization contracts stipulated with Eurovita, which had been ordered in February. These days, according to reports from 24 hours onlyMeetings of a “mainly informational” nature are held with the participating banks to which the project will be presented.

some numbers

as he read panorama On newsstands, 353,000 Eurovita customers have subscribed to policies worth €15.3 billion. An important figure, higher “than all the great collapses in the history of Italian savings. More than 12.1 billion euros of the bonds of Argentine Tango, the hole of Parmalat, and the corresponding value of 11 billion euros of the shares of the two Veneto banks, Popolare Vicenza and Veneto Banca, were sold to account holders as products “Safe” and it was canceled due to the mismanagement of the two institutes.

The Eurovita bubble burst last September, when IVASS asked to recapitalize the company, which at the same time had reached the solvency floor II. As of June 30, 2022, the most recent data available, the index was already at 117 percent. It must be remembered that the average Italian insurers have a 2 solvency ratio of 230 percent, an indication that Eurovita has been around 150 percent lower for years.

The hypothesis that must be studied in order to save

At the moment, according to the reconstructions he gave 24 hours onlyThere will be a process on the table that will gain general approval at the institutional and government levels. The central point, however, will be the amount of liquidity injection needed to return Eurovita to adequate solvency, around 150%: the total figure will be equal to 400 million, of which 100 million – already paid – is paid by Cinven, 100 million by distributed banks, namely Fideuram, Fineco, Credem and Sparkasse, 200 million from the insurance sector, including Generali, Intesa Sanpaolo Vita, Poste, Unipol and Allianz. A loan will also be added – a kind of “safety net” to finance the recovery of customer policies at the end of the receivership – which in recent days, according to the Confindustria newspaper, has considered the possibility of activating a credit line of about 2 billion.

The hypothesis described so far, which would certainly have the advantage of involving more people in the burden of rescue, could nevertheless introduce sensitive aspects that are difficult to overcome, starting with governance. And he points out another aspect that “may be more relevant.” the sun, is the fear that the whole process “could turn into a black hole” because – once the company is secured – policy refunds, currently frozen by IVASS, will be released. And here small rosy scenarios can open up, especially if there is an escape by contract holders. In short, there may be a need again to search the portfolio. Without forgetting that the distributing banks will offer a loan at a rate close to 4%, which is also an important figure for insurance companies in favor of a system solution.

Plan B

For this, the second The sun is 24 hoursGiven the difficulty of the project on the table, there will also be a Plan B under consideration which “will still see participation, albeit in different roles, for subjects already questioned” and which “would give certainty to clients”. In the past, it was assumed that unit-linked policies could be offered on the market (which, given the greater similarity to banking products, would be transferred to distributed banks), while separate management policies would remain with incoming insurance companies: this solution, however, never found luck with the world of Insurance. In this regard, the next few days will certainly be crucial to understand the path that will be taken to avoid the liquidation of the company that ended up in exceptional management on March 31. The current commissioner, Alessandro Santulequido, is pulling the strings. At stake, we should not forget that there are more than 400,000 customers with total premiums of up to $1 billion indicated by 15 billion reserves, of which 9 billion are related to separate management and 6 billion are to associated units.