Generali implements European growth plan with €2.3bn Liberty Seguros acquisition

Generali is buying Liberty Mutual’s Spanish unit Liberty Seguros, which includes operations in Ireland, Northern Ireland, Portugal and Spain, for €2.3bn in cash. Generali said the deal, which adds €1.2bn in premium, will increase its market position in Spain from six place to fourth and sees it enter Ireland with a top ten position and Northern Ireland for the first time. Generali said the acquisition presents “an appealing opportunity to further expand the group’s European footprint in a profitable and attractive market”. It added that Spain, Portugal and Ireland offer opportunity for growth, with lower insurance penetration rates than other European markets. Liberty Seguros offers insurance to smaller commercial and personal customers. Generali’s CEO Philippe Donnet said: “Generali is acquiring a profitable insurance business in three growing European markets with very attractive characteristics, which will create significant long-term value for all stakeholders.” Jaime Anchústegui Melgarejo, CEO of international at Generali, said: “This transaction underlines the group’s commitment to Spain and Portugal, while strengthening our European footprint, as we enter Ireland with an important market share.” Analysts agreed the deal is consistent with Generali’s growth ambitions in Europe. Christian Badorff, vice president at Moody’s, said the deal is one of the largest acquisitions for Generali in recent years. “[The acquisition] is fully in line with Generali’s strategic ambitions as it strengthens the group’s position in Spain and Portugal, and further shifts the group’s earnings base to non-life underwriting results,” he said. Badorff added that by including several smaller recent acquisitions, Generali has all but used the M&A budget for its 2022-24 strategic cycle. Berenberg estimates Generali could have €500m left from its original spending pot of between €2.5bn and €3bn. Berenberg said the price tag for Liberty Seguros appears to be high on a price-to-book basis of 1.9x, but it added that the company’s earnings in 2022 made it more attractive. “We believe the deal is positive for Generali as it is low risk: of the €1.2bn premiums acquired, €1bn relates to Spain and Portugal, where Generali is already present with sizeable operations,” Berenberg said. It added that Liberty Seguros booked a further €200m in premiums from Ireland. Berenberg estimates that Liberty Seguros will boost Generali’s non-life premiums in Spain by 45% and in Portugal by 20%. Liberty Mutual said Liberty Seguros is its largest operation outside the US. The insurer will retain a presence in Europe though Liberty Specialty Markets, Liberty Mutual Reinsurance, Liberty Mutual Surety, Liberty IT and Hughes Insurance. Liberty Seguros is headquartered in Madrid and employs 1,700. “Our dedicated Liberty Seguros employees have done a tremendous job serving our customers, brokers, agents, partners and communities – building a highly respected and profitable business. They will be a strong addition to Generali, a leading global insurer with a strategic and adept business model,” said Liberty Mutual’s president and CEO Tim Sweeney. Sweeney added the sale will sharpen Liberty Mutual’s operational focus.

Generali implements European growth plan with €2.3bn Liberty Seguros acquisition

Deal uses bulk of Generali’s M&A budget

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