May 18, 2020 / 2:00 PM / 2 months ago

Italy's Cattolica says could expand insurance JV with Banco BPM

MILAN (Reuters) - Italian insurer Cattolica Assicurazioni (CASS.MI) could expand an insurance partnership with bank Banco BPM, while the fate of a similar joint venture with rival UBI is still unclear, the company’s CFO said on Monday.

The Verona-based insurer, in which the top investor is Warren Buffett’s Berkshire Hathaway (BRKa.N), has had an 850 million euro “bancassurance” agreement with Italy’s third largest lender Banco BPM since 2018, which is limited to only part of the bank’s branch network.

Cattolica’s newly appointed CFO Atanasio Pantarrotas, when answering a question on possible M&A deals in the next 12-18 months on a first-quarter conference call with analysts, said expanding the scope of the partnership to cover Banco BPM’s entire network could be a “fairly likely option”.

To be ready for any future deals the insurer’s board will ask shareholders to approve a potential new share issue for up to 500 million euros to be carried out before June 2025, Pantarrotas said.

“It doesn’t mean we’re thinking of a 500 million cash call right now”, he said.

Bancassurance deals allow an insurance company to sell its products to a bank’s clients through the latter’s branch network.

Cattolica Assicurazioni has also an insurance joint-venture accord in place with UBI Banca which expires in December, though sources have said it could be extended

However the possible extension of that partnership has been put at risk by Intesa Sanpaolo’s (ISP.MI) proposed takeover of UBI Banca, Pantarrotas said.

“It’s likely that Intesa would follow other plans if the offer is successful”, he said. “At the moment it’s hard to say what will happen.”

Intesa has its own in-house insurance business.

Intesa’s all-paper offer to create the euro zone’s seventh-largest banking group with a focus on insurance and wealth management has met resistance from some of UBI’s core shareholders. UBI itself has said its board would assess possible alternatives.

Cattolica raised its stake in UBI to 1% of the bank’s capital in late February, joining a group of the bank’s shareholders which have rejected Intesa Sanpaolo’s takeover offer.

Reporting by Andrea Mandalà; editing by Valentina Za and Kirsten Donovan

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