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.