Viridium Group

Activity
Life insurance and retirement products
Transaction value
€300 million
Acquired
Aug 2013
Sector
Financial Services

Business
Cinven acquired Heidelberger Leben Group (since rebranded Viridium Group in October 2016) in April 2014, from Lloyds Banking Group in an exclusive partnership with Hannover Re, the third largest reinsurer worldwide. Founded in 1991, the Viridium Group ("Viridium"),  is the leading specialist in the management of life insurance portfolios in Germany and at the end of 2015 administered a total of c. 840,000 insurance policies and approximately €11 billion in assets. Virdium has been formed through the merger of two businesses under Cinven's ownership: Heidelberger Leben ("Heidelberger") which specialised in retirement planning, surviving dependents and risk-planning products with a focus on unit-linked solutions; and Skandia Leben ("Skandia") which was active in the area of unit-linked retirement planning products. 

Investment attractions and strategy
Cinven has a strong investment track record in Financial Services. The acquisition of Viridium follows Cinven's investment in Guardian Financial Services ("Guardian"), a UK manager of life and pension policies with £8 billion in assets from Aegon in November 2011 and the subsequent add-on acquisitions in 2012 and 2013. In the same way that Guardian is a consolidation platform for the UK market, Viridium is a consolidation platform for life insurance in Germany.

The German life insurance market is the third largest in Europe and is highly fragmented. Disposal options for life insurance portfolios are increasingly being assessed in Germany, driven by a greater focus on core business, a lack of critical mass in the market and the challenges of generating significant new business volumes. As a result of these factors, there is significant opportunity for the execution of a consolidation strategy.

Cinven's Financial Services team identified the German life insurance sector and, furthermore, Viridium, as an attractive investment opportunity given:

  • the company's position as a focused, unit-linked player of scale, already focused on existing customers and customer service;
  • the significant opportunity for consolidation in the German market, enhanced by first-mover advantage;
  • the scope to create a high-quality platform for further consolidation including significant investment in IT; and
  • a strong management team.

Viridium is set to benefit from the continuing changes in the market and to make a key contribution to the strategic options for the German life insurance industry. Policyholders will benefit from lower administration costs as well as customer service improvements.

Progress
In March 2014, Viridium announced its agreement with Old Mutual plc to acquire Skandia Germany and Austria, which administered around 400,000 policies and had €4.9 billion of assets under management as at 31 Dec 2013, more than 90% of which are unit-linked. This represented the first step in Viridium's consolidation strategy for life insurance companies and portfolios in Germany. In 2015, Virdium announced the sale of Skandia Austria to FWU AG to enable focus on the German market consolidation opportunity.

In July 2014, Dr. Heinz-Peter Roß joined the company as Group CEO. Dr. Roß joins from Talanx AG where he was an Executive Board member in charge of the retail business in Germany.