Zurich Insurance has signed an agreement to sell its pre-2007 UK legacy employers’ liability portfolio to Bermuda-based Catalina.
Zurich Insurance stated that the portfolio has gross liabilities of $2bn which include industrial disease-related claims such as asbestos.
The transfer excludes Zurich Municipal policies, International Programme policies and certain packaged policies.
This transaction, which is subject to regulatory and court approvals, will be completed in two steps and is expected to be completed in two years of time.
The first step will include a reinsurance agreement between Zurich Insurance and Catalina General Insurance. The second step will include the transfer of policies and liabilities to Catalina London.
Zurich Insurance Group Group chief financial officer George Quinn said: “The sale of this portfolio reflects Zurich’s strategy to eliminate or reduce exposure to legacy lines of business. This focus on actively managing capital allocation to improve overall returns will continue in 2019.”
In the last quarter of this year, upfront expenses related to the transaction could lead to a small loss recognized in business operating profit, but during the full period of the transaction, Zurich Insurance expects an overall positive contribution to the business operating profit.
Zurich Insurance also claims that the transfer could have a negligible impact on its Economic Capital Model (Z-ECM) capital position.
In September, the company signed a agreement to acquire 80% of stake in Asuransi Adira Dinamika (Adira Insurance), a major property and casualty (P&C) insurer in Indonesia, from PT Bank Danamon Indonesia (Bank Danamon). After the transaction is completed, Bank Danamon will hold the remaining 20% stake.
The acquisition amounts to IDR 6.15 trillion ($414m) with a potential for incremental payments in the future, based on performance. With this acquisition, Zurich Insurance is expected to become the largest foreign P&C insurer in Indonesia.
This transaction includes two separate long-term cooperation agreements with Bank Danamon and with Adira Finance, which is the second largest motorcycle and auto financing solutions provider.
Subject to regulatory approvals and customary closing conditions, the company expects to close the transaction within the next six months.