Zurich Insurance Group has agreed to acquire the Latin American operations of QBE Insurance Group (QBE) for $409m.

The transaction, which is subject to regulatory approvals, will increase Zurich’s capabilities in countries such as Brazil, Colombia, Mexico and Ecuador.

Zurich expects to fund the transaction, which is expected to be closed by the end of this year, from its internal resources.

The operations to be acquired had gross written premiums of about $790m in 2017.

The operations complement Zurich’s current business in Argentina and add further distribution and product capabilities, especially among small and medium sized commercial customers.

About 50% of the acquired operations are in Argentina, and Zurich said that the addition will nearly double  its property and casualty business in the country, leading to an overall market share of 8.4%.

Zurich Latin America CEO Claudia Dill said: “This transaction positions us as the leading insurer in Argentina, a market that is demonstrating strong growth, a stable economy and a positive environment for insurance.

“It deepens our capabilities in the retail and commercial businesses and supports our strategy to become the preferred retail and commercial insurer in the region, protecting our customers and helping them to reach their full potential. We welcome our new customers, distributors and colleagues to Zurich.”

The company expects to achieve an overall return on investment in excess of its indicated hurdle rate of 10% within the initial full year after the transaction completion.

QBE Group CEO Pat Regan said: “The decision to exit Latin America is consistent with our focus on simplifying the Group, reducing risk and improving the consistency of our results.

“Following a detailed review of our Latin American Operations, we determined that QBE was no longer the best strategic owner of these businesses.

“Zurich has a significant presence in Latin America and a strong commitment to the region. Following the completion of the sale, we look forward to cooperating with Zurich to service the needs of our multinational customers operating in Latin America.”

Image: Zurich's new headquarters at Mythenquai. Photo: Courtesy of Zurich.