MILAN, May 4 (Reuters) – Italy’s top insurer Generali (GASI.MI) said on Thursday it had agreed to sell its German specialised pension unit to Fosun-backed Frankfurter Leben as it seeks to improve profitability in the life business and free up capital.

By selling Generali Deutschland Pensionskasse (GDPK), the Italian insurer will add one percentage point to its Solvency position and around 10 percentage points to that of its German holding company, it said in a statement.

Frankfurter Leben will pay a token price for the acquisition, a source close to the deal said.

GDPK was founded in 2002 and has around 2.8 billion euros ($3.09 billion) in capital reserves and 150,000 policies. Its portfolio was mainly written in 2003-2005, and new business ceased at the end of 2016.

In 2019 Generali sold a majority stake in life insurer Generali Leben, to private equity-backed Viridium, as it sought to cut risks on savings business amid record low interest rates.

Generali said that the deal to sell GDPK was expected to be completed by the end of 2023, subject to the approval of the German financial regulator BaFin and some local anti-trust authorities.

Frankfurter Leben Group is majority-owned by Fosun International (0656.HK) and specialises in buying life insurance portfolios from other insurers and continuing to manage them.

Its acquisition of GDPK will not change anything for the customers of GDPK, and the insurance contracts will continue unchanged, Frankfurter Leben said in a separate statement.

($1 = 0.9049 euros)

Reporting by Gianluca Semeraro; editing by Susan Fenton

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