Zurich Financial Services Group has signed an agreement to acquire a 50% stake in the life insurance, pension and general insurance operations of Banco Sabadell.
This transaction establishes a long-term strategic distribution partnership between Zurich and Banco Sabadell.
Zurich will acquire a 50% participation in BanSabadell Vida de Seguros y Reaseguros, BanSabadell Pensiones, and BanSabadell Seguros Generales de Seguros y Reaseguros. While Zurich will have management control of the jointly owned companies and fully consolidate them, Banco Sabadell will continue to be a 50% stakeholder.
According to Zurich, the agreed transaction represents a significant expansion of Zurich’s insurance operations in Spain.
The purchase price for 50% of Banco Sabadell’s life insurance and pension companies amounts to approximately $1.02 billion, plus an earn-out component of up to approximately $188 million. The purchase price for 50% of Banco Sabadell’s general insurance company amounts to approximately $157 million, plus an earn-out component of up to approximately $47 million.
As part of the transaction, the mentioned insurance companies will enter into bancassurance agreements with Banco Sabadell and two of its affiliates to sell life insurance, pension and general insurance products through Banco Sabadell’s branch network on an exclusive basis. The exclusive distribution agreement runs for 25 years and can thereafter be extended.
Zurich will finance this transaction with internal resources. The transaction is subject to the approval of the relevant regulatory authorities and is expected to close by the fourth quarter of 2008.
Mario Greco, CEO of global life insurance at Zurich, said: This is another milestone in the implementation of our Global Life strategy, and reinforces our strength in bancassurance distribution. When combined with our other existing partnerships in Spain, this alliance places us as one of the leading players in the Spanish life insurance market.