Possible consolidation of the European insurance sector

While the Italian banking sector remains fragile, rumors since December 2016 of a potential takeover of the Italian Assicurazioni Generali SpA (G) – or at least of its French activities – by German group Allianz (ALVG) is being ill-perceived in Italy. A hundred Italian Senators, most of them members of the current ruling Democratic Party (PD), appealed to the government of Paolo Gentiloni that Generali could not – and should not – be purchased by foreign interests. “Politics cannot remain silent,” worried Senator Francesco Russo, although the Italian State which isn’t a shareholder can’t theoretically intervene in this matter.

Italy’s largest insurance group Generali is attracting some real interest from both its German competitor Allianz and Italian competitor Intesa Sanpaolo (ISP). If from a political viewpoint, Italy seems to prefer an Italo-Italian solution, namely a rapprochement between Generali and Intesa Sanpaolo, it would not necessarily be the most optimal solution considering that a rapprochement with Allianz – perhaps with the cooperation of Intesa Sanpaolo – would enable Generali to strengthen its financial status and reduce its exposure to the Italian market which would then be embedded in a much larger context.

Furthermore, the stock market seems to prefer such a hypothesis. The consolidation of the European insurance sector could in this case further assert Allianz‘s leadership and give the German giant the ambition to become the third largest asset manager in the world. This whole maneuver should prompt the French group Axa (AXAF) to react even though its CEO Thomas Buberl indicated his company doesn’t seek to participate in the consolidation.