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Zurich Insurance Group AG ADR ZURVY

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Zurich Insurance Announces Its Italian Life and Pensions Back Book Sale

Analyst Note

| Henry Heathfield, CFA |

On Jan. 3, 2022, Zurich Insurance announced its Italian life and pensions back book sale. This block of business consists of both traditional and modern policy styles and is being purchased by GamaLife, a Portuguese insurance business. The main reason for the transaction seems to be capital release, with the sale releasing USD 1.2 billion of capital requirement. This, according to Zurich, should increase its Swiss Solvency Test by 11 percentage points. Furthermore, the transaction is expected to increase liquidity at Group by around USD 200 million. The sale is subject to regulatory approvals and expected to complete in the second half of 2022. We maintain our CHF 444 fair value estimate and our narrow economic moat rating.

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Company Profile

Business Description

Zurich Insurance is a large primary insurer with three main divisions: general insurance, life insurance, and Farmers Management Services. Over the years, we believe Zurich has carved out two strong franchises. First, we think its commercial insurance offering is one of the best in the industry. The business has a strong focus on client relationships and underwriting. Then there is Farmers Management Services, an administration services offering serving the Farmers exchanges. This intangible asset serves a mutuallike insurance body and, with its near 700-basis-point management fee, delivers double-digit returns on equity.

Mythenquai 2
Zurich, 8002, Switzerland
T +41 446252525
Sector Financial Services
Industry Insurance - Diversified
Most Recent Earnings Dec 31, 2016
Fiscal Year End Dec 31, 2021
Stock Type
Employees 52,930