Reuters: Private Equity: Fondiaria confirms 1.1 bln euro cash call for merger

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Fondiaria confirms 1.1 bln euro cash call for merger Mar 16th 2012, 09:50 MILAN, March 16 | Fri Mar 16, 2012 5:50am EDT MILAN, March 16 (Reuters) - Troubled Italian insurer Fondiaria-SAI said on Friday it will propose a 1.1 billion euro ($1.4 billion) capital increase as part of plans to merge with peer Unipol. Bologna-based Unipol agreed in January to a deal brokered by top investment house Mediobanca to save loss-making Fondiaria in a four-way merger which involves a series of capital increases. On Thursday a source told Reuters the board of Fondiaria had confirmed the size of the capital increase will be up to 1.1 billion euros. Earlier in March Fondiaria's parent company Premafin had asked for a reduction of the size in light of Fondiaria's improving health and better market conditions. A takeover by Unipol, Italy's No.3 insurer by premiums, would create a company with 32 percent of Italy's non-life insurance sector and 37 percent of its motor insurance business. On Thursday Unipol said the combined entity would target non-life premiums of 10.5 billion euros ($13.72 billion) in 2015. Synergies would be more than 300 million euros in the medium term. The Unipol plan has been challenged by a competing bid from private equity funds Palladio Finanziaria - a regional player with clout in Italy's North-East - and Sator, founded by Italian turnaround banker Matteo Arpe. In a statement on Friday, Fondiaria said it posted a loss of 1.03 billion euros for 2011, hit by impairments caused by market turbulence. In 2010 the insurer reported a loss of 929 million euros. It said its solvency ratio - a measure of an insurer's capital - was 78.2 percent at the end of 2011 but added that thanks to the recovery of the financial markets it was close to 90 percent on March 8. ($1 = 0.7651 euros) (Reporting By Stephen Jewkes; Editing by Erica Billingham) Link this Share this Digg this Email Reprints

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