Bloomberg News

Groupama May Cut Stakes in SocGen, Mediobanca, Veolia

March 15, 2012

Groupama SA (GPAS), the French insurer that swung to a 2011 loss on Greek sovereign-debt writedowns, may sell part of its holdings in Societe Generale (GLE) SA, Veolia Environnement SA (ALTEV) and Mediobanca SpA. (MB)

The stakes “aren’t going to stay on Groupama’s balance sheet forever,” Chief Executive Officer Thierry Martel told reporters at a meeting in Paris today, when asked whether the insurer is considering cutting its holdings in the three firms. Any sales will depend on market conditions, he said.

Martel, who became CEO in October, ending the 11-year tenure of his predecessor, Jean Azema, got help from state-owned bank Caisse des Depots et Consignations to bolster Groupama’s solvency level. The insurer in December agreed to sell part of its stake in real-estate company Silic SA (SIL) to CDC, which yesterday also injected 300 million euros ($392 million) in Groupama’s unit Gan Eurocourtage by subscribing to preferred shares.

Groupama is aiming to sell Gan Eurocourtage, its private- equity funds and its U.K. insurance business, Martel said today. While the company wants to focus on its main insurance markets - - especially France and Italy -- it will stop targeting acquisitions for international expansion, he said.

‘Turned the Page’

“Clearly we’ve turned the page of capital opening and fast growth” through takeovers, Martel said. The insurer, which plans 400 million euros in cost savings by 2014, will “stabilize or cut slightly staff” without making any layoffs, the CEO said.

Stock investments represented about 13 percent of Groupama’s invested assets at the end of 2011, down from about 16 percent a year earlier, according to a presentation today. The firm plans to reduce the proportion of stock investments to about 5 percent over the next two to three years, Deputy CEO Christian Collin told reporters.

Groupama’s holdings of Greek government debt was about 3.2 billion euros before the writedowns, Collin said. That’s more than the insurer’s Spanish sovereign risks. Groupama bought half of its Greek government holdings between 2001 and 2008, while the remaining half was acquired in 2009, Collin said.

Groupama, owned by a group of French regional insurers, had a 1.8 billion-euro net loss in 2011 as it booked 1.55 billion euros in writedowns from Greek sovereign debt and 1.5 billion euros of losses on its “strategic” stock investments, the company said.

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net

To contact the editor responsible for this story: David Whitehouse at dwhitehouse1@bloomberg.net


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