Zurich Insurance Group said today (4 January) that its subsidiary Zurich Investments Life S.p.A. has agreed to sell its life and pension back book, composed of both traditional and unit-linked policies, to the Portuguese insurance company Companhia de Seguros de Vida (GamaLife).
The sale will see approximately $9.5bn of net reserves transferred to GamaLife with completion expected in the second half of this year, subject to regulatory approvals.
Zurich group chief financial officer George Quinn said: "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. 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."
Zurich said the deal did not change contractual obligations toward policyholders and distributors, and that it would continue to offer innovative protection and unit-linked solutions to customers in Italy.
Matteo Castelvetri, Chief Executive Officer of GamaLife Group, said:"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.
"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."
On completion of the transaction, Zurich's capital requirement under the Swiss Solvency Test is expected to decrease by approximately $1.2bn, adding approximately 11 percentage points to the Swiss Solvency Test ratio.
In addition, the transaction is expected to increase the Group's liquidity by approximately $200m.
GamaLife is a pan-European life and wealth management platform, founded in 2019 and backed by funds advised by Apax Partners, focused on technology and sustainability.
GamaLife in Portugal, which is regulated by the Autoridade de Supervisão de Seguros e Fundos de Pensões, held total assets of €3.7bn and total equity of €233m as of June 2021 (December 2020: total assets €4.1bn and total equity €201m.
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