(Bloomberg) -- Cinven-backed German life insurance consolidator firm Viridium Group is attracting early interest from suitors including Apollo Global Management’s affiliate Athora and Blackstone Inc.-backed Resolution Life, according to people familiar with the matter.
The asset is also poised to attract investment firm Sixth Street, the people said, who asked not to be identified as the information is private. A deal could value Viridium at more than €3 billion ($3.3 billion), the people said.
Cinven has been working with advisers Goldman Sachs Group Inc. and boutique firm Fenchurch Advisory and held initial discussions with the potential suitors for Viridium, the people said. Some US life insurance consolidators looking to grow in Europe may also show interest and a sale process is slated to kick off later this year, they added.
Viridium is one of the largest asset managers and consolidators of the so-called back books, or portfolio of legacy insurance policies which it manages until maturity. Based near Germany’s financial capital Frankfurt, the company has 3.4 million policies with €67 billion of assets under management and annual net income of €325 million in 2023.
It was founded by Cinven and Hannover Re as Heidelberger Leben Group in 2014 and was renamed two years later. Italian insurer Generali is also a shareholder of Viridium. Hannover and Gererali are likely to keep their stakes, the people said.
Deliberations are ongoing and the companies could still decide against proceeding with any offers, the people said. Spokespeople for Athora, Blackstone, Cinven, Fenchurch, Generali, Goldman Sachs and Sixth Street declined to comment, while representatives for Hannover and Resolution Life didn’t immediately respond to requests for comment.
Private equity firms have been keen on firms handling legacy policies as insurance companies offload these assets to free up solvency capital. Viridium’s owners are considering strategic options for the business and seeking a buyer with a long-term investment horizon or permanent capital, its Chief Executive Officer Tilo Dresig told reporters in Frankfurt in May. Potential suitors could in principle be asset managers or large insurance companies, Dresig said.
Viridium is known for taking out costs managing legacy life insurance portfolios and the attached fixed-income investments. Buyout funds’ ownership of life insurance assets has drawn scrutiny from European regulators concerned that the investors’ limited ownership periods aren’t suited to the long-term nature of the industry. Some vehicles, like Athora and Resolution Life, have partnered with alternative asset managers but also have backing from longer-term investors like sovereign wealth funds that work on a longer time horizon.
Italian insurance consolidator Eurovita, which is also backed by Cinven, last year went into administration after it fell short on solvency requirements when bond-market volatility hit portfolios and clients were seeking to pull money. In May, Athora and Axa SA terminated a deal to transfer life insurance policies in Germany almost two years after announcing it.
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