Zurich Acquires QBE to Become the Leading Insurer in Argentina
Zurich has entered into an agreement to acquire the operations of Australian insurer QBE in Latin America for a total aggregate price of $409M subject to closing adjustments. The transaction, which is subject to regulatory approvals, will position Zurich as the leading insurer in Argentina, while also adding incremental scale and capabilities in Brazil, Colombia and Mexico and making the Group the number three insurer in Ecuador.
“This transaction positions us as the leading insurer in Argentina , a market that is demonstrating strong growth, a stable economy and a positive environment for insurance. It deepens our capabilities in the retail and commercial businesses and supports our strategy to become the preferred retail and commercial insurer in the region, protecting our customers and helping them to reach their full potential. We welcome our new customers, distributors and colleagues to Zurich” – Zurich’s CEO for Latin America, Claudia Dill.
The acquired operations had combined gross written premiums of ~ $790M in 2017, with a highly diversified product offering and strong distribution.
Argentina represents around 50% of the acquired operations. The transaction will approximately double Zurich’s property and casualty (P&C) business in Argentina and create the leading insurance franchise in the country across the P&C and life businesses with 8.4% market share and the third-largest stand-alone P&C business with a similar market share. The acquired operations complement Zurich’s existing businesses in Argentina and add additional distribution and product capabilities particularly among small and medium sized commercial customers.
In Brazil, Colombia and Mexico, the Group will gain a range of incremental capabilities and access to additional distribution channels, and in Ecuador the acquired business ranks third in the country.
Zurich expects to achieve an overall return on investment comfortably in excess of the Group’s indicated hurdle rate of 10% within the first full year post completion of the transaction. The acquisition is expected to be completed by the end of 2018 and is expected to be funded from internal resources.
Speaking of M&A, Phoenix Group, UK’s largest consolidator of closed life assurance funds with ~6M policyholders, announced the acquisition of Standard Life Aberdeen’s UK and European life business for £2.9B.
