Cinven buys Heidelberger Leben from Lloyds for €300m

Amy King
21 August 2013

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Cinven has acquired a majority stake in Heidelberger Leben, a German provider of retirement and life insurance products, from Lloyds Banking Group for around €300m.

The GP bought an 80% stake, with Hannover Re, the world's third largest reinsurer, acquiring the remaining 20%. Cinven invested via its Fifth Fund, which closed on €5.3bn in June 2013 following a top-up that allowed further LPs to commit to the vehicle.

The sale has resulted in a loss for Lloyds, which was unable to achieve the valuation it reported in its balance sheet for the asset, reports say.

The firm will become a consolidation platform for life insurance portfolios in Germany. The local life insurance market is the third largest in Europe yet remains highly fragmented, according to Cinven. The buyer hopes to benefit from the number of parent companies disposing of non-core assets, including life insurance arms.

Cinven plans to grow the firm through a €25m investment in IT systems and a strengthened focus on customer service.

The acquisition and consolidation strategy is in line with Cinven's experience in the sector, following the buyout of UK life and pensions provider Guardian Financial Services from Aegon for £275m in 2011. The following year, the investee company bought a substantial book of business from Phoenix Group, agreeing to buy 300,000 in-payment pensions annuities. As a result, the firm now manages approximately assets of £1.3bn on behalf of more than 600,000 customers.

Company
Heidelberger Leben provides retirement and life insurance products in Germany. The firm has a portfolio of around 600,000 policies, primarily unit-linked, and reported assets worth €5.2bn at the end of 2012. The firm is headquartered in Heidelberger and employs around 300 staff.

People
Caspar Berendsen is a partner at Cinven and worked on the deal. The Heidelberger Leben management team will continue to be led by Michael Sattler, chief executive. Rolf-Peter Hoenen, former CEO of German insurance provider HUK-Coburg and former president of the German Insurance Association (GDV), will join the firm as non-executive chairman.