(Zurich) continued on an acquisition path in July, announcing deals
in Europe and Brazil. These brought the number of acquisitions this
year to six and forms part of the Swiss composite insurer’s
ambitious growth target that includes growing annual premium
equivalent (APE) life business from $2.9 billion in 2007 to $5.7
billion by 2010.
A key focus is on expanding the bancassurance distribution channel,
a consideration evident in Zurich’s latest deals. In the most
significant of these, Zurich is to acquire 50 percent stakes in
Spanish bank Banco Sabadell’s life insurance and pension units,
BanSabadell Vida and BanSabadell Pensiones, and its general
insurance unit BanSabadell Seguros Generales.
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The purchase price for the bank’s life insurance and pension units
is €650 million ($1 billion) plus an earn-out component of up to
€120 million. For the general insurance unit Zurich will pay €100
million plus an earn-out component of €30 million. Zurich will have
management control of the jointly owned companies.
As a result of the agreement, Zurich will become the fourth largest
life insurer and fourth largest general insurer in Spain with an
overall share of 6.5 percent of Spain’s insurance market based on
Zurich’s and Banco Sabadell’s combined gross written premium income
in 2007.
BanSabadell Vida generated premium income of €1.45 billion in 2007
and the newly formed BanSabadell Seguros Generales €177 million.
BanSabadell Pensiones ranks sixth in both individual and corporate
pension schemes.
As part of the deal Zurich and Banco Sabadell, Spain’s fourth
largest bank, have entered into an exclusive 25-year distribution
agreement, providing Zurich access to the bank’s 1,225 branches and
2 million customers.
The deal with Banco Sabadell followed Zurich’s acquisition in April
this year of a 50 percent stake in Spanish bank Caixa Sabadell’s
life and general insurance units for a total of up to $510 million.
Based on the bank’s 2007 results the deal, which includes a
distribution alliance, adds premium income of $366 million, all but
$3million of which is from life operations.
Zurich’s bancassurance strategy is also evident in its deals in
Brazil with Brazilian bank Banco Mercantil. Under the terms of the
deal Zurich will acquire 100 percent of Banco Mercantil life
insurance unit Minas Brasil Seguradora Vida (MBSV) for BRL49.7
million ($31 million) and 87.35 percent of its general insurance
unit Companhia de Seguros Minas Brasil (MB) for BRL286.9
million.
In addition Zurich will pay up to BRL99.4 million for a
bancassurance agreement with Banco Mercantil that will extend for
20 years, renewable for additional 10 years. This will provide
Zurich access to the bank’s 50 branches in the state of Minas
Gerais and 4,000 independent brokers.
Banco Mercantil’s insurance operations are heavily slanted towards
general insurance with premium income of BRL339.2 million and
BRL43.5 million being generated by MB and MBSV, respectively, in
2007.
For Zurich the deal will enable it to achieve a visible market
share in Brazil, said Zurich Latin America CEO Jaime Paredes.
Zurich will market life and general insurance products to
individuals and companies, he added.
Though Zurich has had a presence in Brazil since 1984 and has other
Latin American units in Argentina, Bolivia, Chile, Mexico and
Venezuela, the region has so far played a minor role in overall
group results. In 2007 the insurer reported total life APE of $75
million in the region, a mere 2.5 percent of its life APE
total.
Winding up an active month of acquisitions, Zurich announced on 30
July that it had acquired a 100 percent of Baden-Badener
Versicherung (BBV), a provider of personal accident insurance in
Germany for an undisclosed sum.
Marketing via 8,700 brokers, BBV generated premium income of €45
million in 2007.
