Groupama to sell real estate stake to beef up solvency

French insurer Groupama is set to sell its stake in real estate unit Sililc in a state-brokered deal to boost its solvency margin.

Groupama is under pressure from the French regulator to sell assets following a threat from rating agency Standard and Poor’s to downgrade its credit rating into junk territory.

Groupama is thought to be considering a sale of its UK assets, although any decision will be taken at a later date.

“The deal would help Groupama boost its solvency margin by 15 to 20 percent,” a source told Reuters.

The deal will work in a three-step process:

• Before 31 December, Groupama would transfer to state-owned bank Caisse des Dépôts about 6,5% of the share capital of Silic. This will be in exchange for a direct or indirect holding of about 2,7% of the share capital of insurer Icade. At the same time, Caisse des Dépôts would transfer all of its shares in Icade to a holding company controlled by Caisse des Dépôts.
• As a second step, Groupama would transfer its remaining shares in Silic to this holding company.
• A a third step, following these transfers, Icade would file a share exchange offer for the remaining shares of Silic, the holding company having agreed to tender all its shares in Silic to such offer (i.e. 44%).

Meanwhile, Groupama is discussing the reinsurance sale of part of its business with players such as Munich Re , Swiss Re and Hanover Reinsurance group , a source told Reuters, adding that a deal could be done in early 2012.