(Reuters) — Assicurazioni Generali S.p.A. has agreed to sell a majority of its German life insurance unit Generali Leben to private equity-backed Viridium for up to €1.9 billion ($2.22 billion), raising cash for the Italian insurer that could be used for targeted acquisitions.

Europe’s third largest insurer said on Thursday it would sell 89.9% of Leben in a deal that valued the company at up to €1 billion. Viridium will also reimburse an internal loan of €882 million.

The deal is in line with Generali’s aim of rebalancing its portfolio, significantly cutting exposure to interest rate risk and improving risk capital returns, the company said.

Generali Leben was put up for sale last year and Viridium had been vying with Fosun-backed peer Frankfurter Leben and Apollo-backed Athora for the asset, sources said. Reuters reported the exclusive talks with Viridium last week.

Generali Leben represents 36% of Generali’s life insurance portfolio in Germany, where it is the country’s second-biggest player.

“Germany is a strategic market for Generali, and we are now positioned better than ever to reinforce our footprint ... Our strategy in this market is to grow,” Generali Deutschland CEO Giovanni Liverani said.

Generali wants to sell businesses in a dozen or so countries around the world to raise proceeds to help fund expansion of asset management operations and beef up its fee-based business.

It has already raised more than €1 billion from the disposals made to date. The Leben deal fueled speculation about how it would use the cash when it announces a new strategy in November.

Barclays said in a research note on Thursday that the Generali Leben sale made sense from a strategic point of view but questioned the cost.

“Valuation is clearly at a deep discount ... the transaction will only have a modest impact on the group solvency ratio ... while removing €37.1 billion of traditional reserves,” it said.

The deal with Viridium is still subject to the approval of German financial markets watchdog BaFin, which is analyzing the creditworthiness and risk management of the buyer.

Viridium is 80% owned by buyout group Cinven with reinsurer Hannover Re S.E. holding the rest. It has €15 billion in assets under management after the acquisitions of three smaller so-called “back book” portfolios.

A source close to the matter said Generali would take 10% of Cinven’s stake in Viridium, allowing Cinven to take some money off the table, while keeping a 70% stake.

Under the deal, Generali Investment Europe will manage the Generali Leben assets for a five-year period, for a total fee of €275 million.

At 1253 GMT, Generali shares traded 2% higher while Europe’s insurance index was up 0.5%.