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Sale of German life back book would be positive for Zurich: Berenberg

17th December 2021 - Author: Luke Gallin

The potential sale of global insurer Zurich’s German life back book would be positive for the company as it would lower capital allocated to capital intensive traditional life business and potentially result in buybacks, reports Berenberg.

Zurich LogoCiting reports this morning from Versicherungsmonitor, analysts at Berenberg have discussed the potential sale of some of Zurich’s life back book.

According to the German publication, Zurich’s German life subsidiary, Deutscher Herold, is exploring the sale of its traditional life back book.

Reportedly, potential buyers of the business include life run-off firms Athora, Frankfurter Leben, and Viridium.

The business in question accounts for roughly 60% of Deutscher Herold’s German life funds of €47 billion, so around €28 billion.

Versicherungsmonitor reported this morning that Zurich has established a new company called ZurichSander Vermoegensverwaltungs AG to which it could transfer the German life back book in preparation for a sale.

Analysts at Berenberg believe that the sale of its German life back book could release between €3 billion and €3.5 billion of required capital for Zurich.

In November, the insurer highlighted the potential benefits of a life deal, and Berenberg believes that such a deal is imminent in Italy, which would free up roughly €1.2 billion of capital.

“These two deals could, we believe, potentially lead to two buybacks: the first would be to neutralise foregone earnings as per Zurich’s stated priority and the second, potentially to distribute excess capital to investors,” say Berenberg analysts.

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