Intesa acquires full control of health insurance business with US$382 million investment

ITALY — Intesa Sanpaolo, Italy’s largest bank is set to acquire the remaining 26.2% stake of healthcare insurer Intesa Sanpaolo RBM Salute for 360 million euros (US$382 million) in cash.

In 2020, Intesa Sanpaolo Vita, the bank’s insurance unit, purchased 50% plus one share of RBM from the Favaretto family’s holding company for 325 million euros (US$346 million).

The bank further infused capital into the business in 2021 via a new share issue, which resulted in the Favaretto family’s stake reducing to 26.2%.

With this new acquisition, Intesa aims to take full control of RBM before the two call options set for 2026 and 2029.

KPMG Corporate Finance and Pedersoli served as financial and legal advisers, respectively. The bank said in a statement that the acquisition is intended to drive growth synergies between Intesa Sanpaolo RBM Salute and the rest of the group.

Private health insurance companies play a significant role in Italy’s health sector, as evidenced by the 3.3 billion euros (US$3.5 billion) in gross written premiums collected from sickness policies in 2021, as per Statista.

The top 15 insurance companies in the country by value of gross written premiums collected were ranked, with Generali Italia, Intesa Sanpaolo RBM Salute, and Unisalute standing out for collecting over 500 million euros each (US$ 532.5 million).

Generali Italia recorded the highest value of sickness insurance gross written premiums at almost 577 million euros (US$614.5 million), representing 17.6 percent of the total Italian market for sickness insurance written premiums.

This highlights the importance of private health insurance in Italy’s health sector, with Generali Italia leading the pack and experiencing growth in premiums revenue compared to the previous year.

Despite the growing popularity of private health insurance schemes in Italy, there is still an investment gap in the health insurance sector, as healthcare is free in the country.

While inefficiencies and long waiting times in the public health system have led to an increase in demand for private sector services and health insurance, health insurance penetration remains low in Italy, reaching just 0.19 percent in 2020.

Insurance penetration, which is defined as insurance premiums as a percentage of GDP, is considered the standard measure to evaluate the development of a country’s insurance market.

These statistics highlight the potential for growth and investment in Italy’s health insurance sector, as it continues to evolve and adapt to the changing demands of consumers.

In the meantime, Intesa Sanpaolo has announced a dividend payment of €0.0868  (US$0.092) per share, which is 6.2% of the current stock price and above the industry average.

The company has a history of paying dividends for over 10 years, with a current payout ratio of 86%. Despite some instability in its dividend history, the company has grown its distributions at a yearly rate of about 12% over the last decade.

However, the company’s earnings per share has shrunk at a rate of 11% a year over the past five years, which could potentially constrain dividend payments in the future.

While earnings are predicted to gain some ground in the next year, it’s important to be cautious and assess the sustainability of the dividend.

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