Zurich looks to sell $243 million Italy life portfolio -sources

Published : 3 years ago, on 10/06/2021

MILAN (Reuters) – Swiss insurer Zurich is looking to offload an Italian portfolio of life insurance policies with an equity value of around 200 million euros ($243 million), two people close to the matter said.

The process, which targets specialised investors, often backed by private equity, or reinsurance firms, follows similar deals in the industry where negative interest rates have been weighing on companies’ life businesses.

UBS is working with Zurich on the sale of the Italian life policies, the two sources told Reuters. UBS declined to comment.

The challenge of paying guaranteed returns on some life policies coupled with more stringent European capital rules have prompted firms such as Generali and Prudential to sell life portfolios which are closed to new customers.

Zurich is also looking to sell its German life back book business, several sources told Reuters.

However, analysts and bankers say that plan may prove tricky because all of Zurich’s German life business is housed under Deutscher Herold, which uses the cash flow from the back book to fund its new business.

Splitting the two operations will require time. “We don’t comment on rumours or market speculation,” a Zurich spokesperson said in an email to Reuters.

“Zurich is one of the financially strongest insurers in Germany and will continue focusing on retail P&C and life insurance as well as our commercial insurance business,” the spokesperson added.

Zurich said at an investor day 18 months ago that it was looking to focus on “capital release” across its business.

Consolidation in Italy’s insurance sector is intensifying after market leader Generali last week announced an up to 1.17 billion euro takeover bid for rival Cattolica which it expects to launch in the autumn.

($1 = 0.8218 euros)

(Reporting by Gianluca Semeraro and Valentina Za in Milan, Carolyn Cohn in London, Arno Schuetze and Alexander Huebner in Frankfurt and Oliver Hirt in Zurich; Editing by Alexander Smith)