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Italian insurer Generali has acquired US asset manager Conning from Cathay Life that will create one of Europe’s largest investment groups.
It will enable Generali to expand its asset management business in a deal that chief executive Philippe Donnet hailed as a “transformative game-changer” and an “historic step forward” for the insurer.
Taiwanese insurer Cathay will take a 16.75 per cent shareholding of Generali Investment Holding, the Italian group’s asset management arm, as part of the deal.
The transaction means Generali will acquire 100 per cent of Conning that will allow it to create an investment business with more than $700bn under management spanning Europe, the US and Asia, Donnet told the Financial Times.
Connecticut-based Conning, which was established 110 years ago, has grown its assets under management from $85bn less than a decade ago to $157bn.
The deal will allow Generali to expand into fixed income, structured and corporate credit, emerging market debt and private real estate segments, Donnet added.
As part of the deal, expected to be completed in the first half of next year, Cathay could eventually be paid so-called earn-out provisions if certain unspecified pre-agreed terms materialise three years after the closing date.
It will also establish the groups in a long-term partnership in an agreement lasting a minimum of 10 years on Cathay Life’s insurance business’ assets, which will be managed by Generali’s in-house investment arm.
“Generali and Cathay Life speak the same language as we are both in the insurance business, so our interests are fully aligned,” Donnet said.
Generali had earmarked up to €3bn for mergers and acquisitions in the insurance and asset management businesses, in its strategic plan almost two years ago.
It had cited possible deals across several geographies, indicating a potential expansion into the US asset management market was a priority.
Last year it had considered the acquisition of New-York-based Guggenheim Partners.
Donnet said the Conning deal was the first time the group had found the perfect fit after exploring several options to expand its asset management business.
The deal’s structure will not impact Generali’s Solvency II ratio, a key measure of insurers’ financial strength, because there is no upfront payment.
Woody Bradford, who has been at the helm of Conning since 2010, said “this is a highly complementary business combination that presents exceptional long-term opportunities” and proves “stability for clients and employees while also maintaining continuity of leadership”.
Conning expanded into Asia in 2011 when it launched Hong Kong-based Cathay Conning Asset Management, a joint venture with Cathay Financial Holding, the parent of Cathay Life.
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