Eurovita weighs on Cinven, loss of 500 million
The story Eurovita it weighs about 500 million on the shareholder Cinwen. And it could have knock-on effects for investors in one of Cinven’s funds, the Fifth Cinven Fund. While the date of March 31 is approaching for the insurance company, when the freeze on redemptions imposed by theIvass, for its shareholder the bill for the crisis is already high. Flavia Holdcothe English vehicle that owns 100% of Eurovita Holding, approved the 2021 financial statements only in recent days.
The impact on Fifth Cinven Fund
From the accounts of Flavia Holdcothat has Eurovita Holding as the only participation, it also emerges how the Eurovita affair could have a negative impact on the Fifth Cinven Fund, the Cinven fund that holds the stake. In the budget, the participation in Eurovita was fully devaluedimpacting vehicle accounts for 275 million euros.
On the same date (December 31, 2021) a loan made to the vehicle to the company was also written down for 120 million euros. The loan was then transformed in December 2022, before the receivership, into a capital grant. In February, after the commissioning of Eurovita by IVASS, Cinven paid others 100 million non-refundable, in capital account.
From Italy to Jersey and Guernsey
“In 2022 the Solvency II ratio (of Eurovita, ed.) remained below the threshold for which the company can expect to have cash inflows. With this indicator at the balance sheet date (…) loans to related parties and investments held at fair value were devalued to zero“, is written in the balance sheet. In another section of the same financial statements, it is explained how cash inflows from the investment are needed to distribute dividends to the direct subsidiary, Flavia Finco limited.
The latter is based in Jersey and provided the funding for the acquisition of the Eurovita group through a dedicated credit line. Flavia Finco in turn reports to Fifth Cinven Fundwhich is based on the island of Guernsey. The directors explain that without the flow of dividends from Flavia Holdco, Flavia Finco may not be able to meet its commitments to repay the credit line.
Investors
Cinven is a British investment company founded in 1977 to manage the pension funds of coal mines English. In 1995, it became independent and launched its first fund the following year. The company’s website reports that Cinven raised overall 39 billion euros It is made 44 billion from the investments made, over 140. Cinven’s investors are in the majority (53%) pension funds.
Fifth Cinven Fund was launched in 2013 and has collected over 5 billion of commitments by subscribers. The investment in Eurovita dates back to 2016, through a series of acquisitions and mergers which also involved Ergo Providence e Old Mutual Italia. The cost of participation, again according to what is reported in the financial statements of Flavia Holdco, is 305 million euros. It is not clear how much of the Fifth Cinven Fund is committed to Eurovita and how many assets the fund currently has under management. The English groupasked for a comment, has not yet provided a response.