Cinven puts 100 million euros into Italian life insurer Eurovita
MILAN (Reuters) - British private equity firm Cinven has pumped 100 million euros ($106 million) into Eurovita, the Italian life insurer said on Wednesday after it became the first insurance company in the country to be placed under temporary administration.
Cinven-owned Eurovita has seen its cash reserves depleted by the sudden surge in bond yields in the second half of last year, which have hit the value of its government bond holdings, made up largely of French and German issuance.
Bond prices move inversely to yields.
Italian insurance regulator IVASS last year asked Cinven to recapitalise Eurovita but the fund delayed in the hope of clinching a sale of the company.
IVASS decided to place the company under temporary administration after a sale to rival private equity firm JC Flowers collapsed at the last minute in the absence of a reinsurer ready to take part in the deal.
The temporary administrator that Italian insurance regulator IVASS has put in charge of Eurovita after its solvency ratios fell below minimum thresholds said they kept working on plans to rebuild the insurer's capital reserves.
"As a first important contribution ... Eurovita Holding SpA has received a capital contribution of 100 million euros ... from its shareholder," they said in a statement.
While there is no final figure, Eurovita is likely to need roughly four times as much money in total to rebuild its buffers, a person with direct knowledge of the matter said, confirming Italian press reports.
To stem outflows Eurovita has halted early redemptions of its insurance policies until the end of March.
Banks that distribute Eurovita's policies as well as other Italian insurers could be called upon to provide the necessary funds to help ensure savers' confidence in the life insurance sector, the person close to the matter said.
($1 = 0.9406 euros)
(Reporting by Valentina Za, editing by Cristina Carlevaro and Keith Weir)