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Zurich frees $1.2bn of capital with sale of $9.5bn Italian life & pensions back book

3rd January 2022 - Author: Steve Evans

Global insurer Zurich Insurance Group announced this morning that it is freeing up roughly US $1.2 billion of capital through the sale of its legacy Italian life and pensions book of policies.

Zurich LogoZurich said that its subsidiary Zurich Investments Life S.p.A. is selling its life and pension back book, which includes both traditional and unit-linked policies, to the Portuguese insurance company GamaLife – Companhia de Seguros de Vida, S.A.

As well as freeing up around US $1.2 billion of capital, the disposal of these legacy Italian policies is expected to add 11 percentage points to Zurich’s Swiss Solvency Test ratio.

It also significantly reduces Zurich’s exposure to credit risk and the company called it the “first step in a series planned to significantly improve capital allocation across the Group.”

In the Italian marketplace, Zurich now intends to focus on underwriting and selling protection and unit-linked solutions. The insurer also said there will be no change to its contractual obligations toward policyholders and distributors.

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“The sale demonstrates our commitment to improve capital utilization across our life back book. The transaction also reduces our exposure to interest rates and credit risks and allows us to focus on the parts of the Italian life and pensions market where we can best serve our customers. We are confident that GamaLife will continue to provide our customers with the same high quality of service that they expect,” explained Group Chief Financial Officer George Quinn. “The Italian life insurance and pension market is important for us and the recent acquisition of Deutsche Bank’s Italian financial advisor network provides a strong platform for further growth in our preferred products.”

“Together with Zurich, we believe this transaction represents strong strategic alignment between GamaLife’s focus on sustainable growth and Zurich’s intention to exit legacy business in Italy,” added Matteo Castelvetri, Chief Executive Officer of GamaLife Group. “We look forward to welcoming Zurich’s customers. Our focus will be to ensure a seamless transition for all local stakeholders and to bring our values of innovation, simplicity and service across the enlarged GamaLife group.”

Roughly US $9.5 billion of net reserves are being transferred to GamaLife under the arrangement and Zurich expects the deal will enhance its liquidity by approximately US $200 million.

Completion of the deal is expected to occur in the second half of this year, subject to regulatory approvals, Zurich said.

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