Growing pains

23 June 2003

That s a massive bite for the Italian insurer, which will roughly double in size. And Unipol is paying a hefty price. One theory is that the historically leftwing groups that control Unipol could be strengthening the red financial alliance.

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Unipol is buying Winterthur's Italian units for E1.5bn from Credit Suisse. The Italian insurer will pay 90% of the price and 10% will be paid by its 55% majority shareholder Finsoe.

Unipol – whose ordinary shares have a market value of E1.3bn is going to finance the acquisition by raising E1.4bn of fresh capital. It is going to issue new shares at E3.4 for E1bn and sell E300m worth of bonds. Finsoe said it will take up its part of the issue and Mediobanca is underwriting part of the rest.

Winterthur's Italian units had E2bn of premiums in 2002 and E95m of earnings. Unipol hopes that the deal will deliver a return on equity of 11% in 2006. It says the combined group will be the fourth largest in Italy and that its market share will go from 6% to 9%.

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