Generali’s RT1 bond raises €500m, reinforcing financial strength

Italian headquartered insurer Generali has announced the successful placement of its first perpetual Restricted Tier 1 (RT1) bond, a transaction that is aimed at further optimising its strong capital position.

The RT1 bond raised €500 million – issued under Generali’s €15 billion Medium Term Note Programme – from a highly diverse group of institutional investors.

The issuance, a key part of the company’s proactive capital management strategy, saw exceptional demand, with orders exceeding €4.6 billion.

According to the company, the oversubscription, which saw bids more than nine times the financial offering amount, demonstrates strong market confidence in Generali’s financial health and its “Life Partner 27: Driving Excellence” strategic Plan.

The issuance has attracted strong interest from international investors, which accounted for over 91% of the allocated orders, reflecting the Group’s strong reputation on the markets.

Approximately 46% of the Notes have been allocated to investors from the UK and Ireland, 17% to investors from France, 9% to investors from Benelux, and 6% to German / Austrian / Swiss investors.

The perpetual notes may be redeemed at the option of the Issuer starting from April 2, 20231, subject to regulatory approval.

In line with Solvency II requirements for RT1 instruments, the bond includes a loss absorption mechanism. This feature allows for temporary principal write-down if a solvency-related trigger event occurs.

Additionally, coupon payments are at the full discretion of Generali and can be mandatorily cancelled on a non-cumulative basis.

Generali Group CFO, Cristiano Borean, commented: “We are very satisfied by the success of our inaugural Restricted Tier 1 bond, which confirms, once again, the Group’s solid financial position and the confidence of the institutional investors’ community in our ‘Lifetime Partner 27: Driving Excellence’ strategic plan.

“The transaction – which is consistent with our proactive approach to managing the Group’s bond maturity profile – is aimed at further optimizing our strong capital position. The timing of the issuance has been particularly favourable, also thanks to the recent upgrade of the Generali Group by Fitch to AA- after the upgrade of Italy’s sovereign rating to BBB+. The AA- rating reflects Generali’s very strong company profile, robust capitalization, low leverage, and solid performance”.