Italy’s Reale Mutua Eyes €1 Billion Deals in Europe Expansion

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Italian insurer Societa Reale Mutua di Assicurazioni is looking to expand in Europe through acquisitions — and it’s ready to consider deals of up to €1 billion ($1 billion) to make it happen.

“We’re aiming to develop our international presence through M&A,” General Manager Luca Filippone said in an interview in Milan.

The company is looking at acquisitions in Iberia and central and eastern Europe, and possibly in South America, the executive said, with a focus on both life and non-life.

Spain, where the firm already owns three units, will be the main area of concentration, said Filippone, who’s held his job — the insurer’s top position — since 2015.

The Spanish market’s makeup could make it a natural for future moves in the sector.

“There is room for consolidation in the Spanish insurance market, particularly among smaller firms,” Marcos Alvarez, head of Insurance at Morningstar DBRS, and Mario De Cicco, a vice president at the ratings agency, said in a separate interview, noting that potential buyers are likely to be foreign players.

Turin-based Reale also recently completed the purchase of an 85% stake in family-run Greek insurer Ydrogios Insurance and Reinsurance SA for about €80 million. It plans to buy the remaining 10% from the founding family in 2026 while working to acquire the other 5% from minority shareholders.

Foreign Revenue

Reale, which had €3.4 billion in net equity as of the end of June, could use debt to pay for targets above the €1 billion threshold if the right opportunity arises, Filippone said. The company currently has no financial leverage.

For the longer term, Reale is looking to maintain its current identity. “In 10 years we still want to be a mutual insurance firm, with a focus on sustainability,” Filippone said.

As part of the insurer’s plan, Filippone aims to increase foreign revenue to 30% of the total by 2034, compared with 20% last year.

The firm is also looking beyond insurance in its home market, where it’s working to diversify into areas like communal and assisted senior living, and other parts of the health sector.

Reale Group, through Italiana Assicurazioni, is currently bidding to become the insurance partner of lender Banco di Desio e della Brianza SpA, Filippone said. The process is expected to be finalized in the next few months.

The insurer posted net income of €156.9 million in 2023, 27% more than the previous year. It holds an A rating with a stable outlook from Fitch Ratings, which has highlighted its “moderately reduced asset concentration risk” as well as “improved capitalization and leverage.”

Founded in 1828 and granted a royal license by King Carlo Felice of Savoy the following year, Reale Mutua is a mutual insurer with policy holders serving as its owners.