The Italian insurer Generali has announced the purchase of Conning Holdings Limited (CHL), manager of insurance assets and institutional clients of Cathay Life, a subsidiary of the Asian financial institution Cathay Financial Holdings, as reported in a statement, in which it does not reveal the import of the transaction.
In addition, as a result of the acquisition, Cathay Life will be divested of a minority share of Generali Investment Holding and will support Generali Asset Management’s strategic aspirations for growth globally.
Conning and its subsidiaries bring together around 157,000 million dollars, some 144,000 million euros in assets under management. The business includes Conning (insurance and institutional fixed income), Octagon Credit Investors (bank lending, CLOs and specialty credit), Global Evolution (emerging markets debt) and Pearlmark (real estate debt and equities).
In this way, the Generali manager will have 709,000 million dollars (650,000 million euros) in assets under management, while the group’s total assets will amount to 845,000 million dollars (775,000 million euros).
As part of the Generali Asset Management ecosystem of affiliates, Conning and its affiliates will continue to be led by the current leadership team, including its CEO and Chairman, Woody Bradford, who will oversee initiatives to facilitate collaboration in areas such as online distribution, the Generali ecosystem. In addition, Conning and its subsidiaries will transition to Generali AM’s operating and risk framework.
In turn, the manager will benefit from Conning’s holding company’s insurance and institutional client base in the US and Asia, and expects the deal to better position it to expand its third-party business in key markets around the world. the world, leveraging the combined investment capabilities and distribution strengths.
In return, Cathay Life is expected to acquire 16.75% of GIH’s share capital at closing, subject to customary adjustments. GIH is the country subholding entity that –at closing– will comprise most of the Generali Group’s global asset management activities, with the exception of selected operations, specifically those in China. In this way, GIH will generate the entire result in Generali’s asset management, excluding the contribution from Chinese asset management.
In addition, Generali and Cathay Life have entered into a long-term alliance whereby Cathay Life has entered into an asset management agreement with a minimum duration of ten years in relation to certain assets under insurance management that will continue to be managed on its behalf. by Generali Asset Management companies, including Conning and its affiliates. In addition, Generali and Cathay Life have also agreed to certain provisions for a variable payment (or ‘earn-out’) that may be paid in cash three years after the closing of the transaction, conditioned on the achievement of certain pre-agreed terms.
The agreements entered into between the parties grant Cathay Life certain corporate governance rights in relation to GIH and provide for a lock-up period on Cathay Life’s shares in GIH. There are also certain parts of exit mechanisms, in line with normal market practice for transactions of this type and duration.
In this way, Generali will not pay Cathay any cash consideration upfront and the impact on the group’s Solvency II ratio is expected to be “negligible”. Ardea Partners and BofA Securities have acted as financial advisors and Linklaters as Generali’s legal advisor in this transaction.
