Generali to realise €1bn profit from BPCE asset management combination

By Rebecca Delaney

Feb 4 - (The Insurer) - The combination of Generali's asset management division with BPCE's Natixis Investment Managers is expected to generate a realised profit for the Italian insurance group of around €1bn ($1.03bn) at closing, which would be neutral for the calculation of the group's adjusted net result.

Last month it was announced that French banking group BPCE and Generali had agreed a tie-up between their asset management divisions to create a leading European asset manager with €1.9trn of assets under management.

Generali in a statement on Tuesday provided more details about the transaction – which is expected to close by 2026 – and its likely impact on the group.

The insurer revealed that it has committed to contribute a total of €15bn in seed money over the first five years to launch new initiatives and investment strategies, with a primary focus on the alternative investments segment.

Seed money activities will be in the form of the subscription of funds and investment mandates, including cash flows of ~€25bn generated by Generali’s insurance portfolios each year between redemptions of maturing securities, coupons and dividends that are reinvested in the various asset classes.

"Seed money is not a new concept for Generali: the group already has a seeding policy enabling the investment of a portion of its insurance portfolios for launching new strategies deemed high-potential and consistent with the group's insurance portfolio allocation objectives," said the statement.

"The combination with Natixis IM offers a unique value creation opportunity for the Generali Group, estimated to exceed €1bn. This estimate reflects the present value of the expected economic benefit from seed money and the synergies expected from the transaction, net of integration costs and higher taxes."

Revenue synergies and operational efficiencies have been identified totalling €210mn annually pre-tax, driven by greater growth potential and cross-selling opportunities. This does not include the expected contribution from the future deployment of seed money, which could contribute to a further increase in estimated revenues through the launch of new high-potential products.

The proposed transaction would, at closing, result in an overall impact of €25mn and €50mn including costs to achieve over the first two years. This excludes the impact of a preferential €250mn dividend in favour of BPCE for the first two years only, which would see an impact to Generali Group between flat and -€25mn.

The net impact on remittance from Generali's group subsidiaries is estimated to be negative for ~€100mn cumulatively over the 2025-27 strategic plan period, mostly due to costs to achieve and ancillary costs.

According to the statement, the combined business is expected to generate revenues of around €4.1bn. In comparison, the upcoming combination of BNP Paribas and Axa Investment Managers will create an entity with €3.4bn in revenues, with European rival Amundi at €3.2bn.

Amundi is currently the region’s biggest asset manager and ninth-largest globally with €2trn of assets under management, according to analysis by Oliver Wyman.

The combined Generali-Natixis entity will be one of the largest managers of insurance assets globally with €0.7trn insurance assets under management, roughly the same as the combined BNP Paribas-Axa IM business and slightly higher than BlackRock (€0.6trn).

Generali Investments will contribute more than €600bn in assets, with Natixis Investment Managers contributing €1.3bn. The new company will have a significant presence in the US, with notable potential for growth in Asia, as well as ambitions to develop the platform as a global leader in managing assets for insurance clients.

As previously reported, under the terms of the 15-year agreement, BPCE and Generali will each have 50 percent of the voting rights.

BPCE’s CEO Nicolas Namias will serve as chairman of the combined business, while Generali CEO Philippe Donnet will be vice chairman.

Woody Bradford, the current CEO of Generali Investments, will serve as CEO of the combined business, while Philippe Setbon, Natixis Investment Managers’ current CEO, will be deputy CEO of the joint venture.

The board of directors of the new entity will be composed of 15 directors, with Generali Investments and Natixis Investment Managers each appointing six directors. Three independent directors will be jointly selected.

The joint venture will be established in Amsterdam, with Italy, France and the US remaining as the operational hubs from which business activities will continue to be directly managed.