Zurich acquires QBE Latin American operations

Zurich Insurance Group has entered into an agreement to acquire the operations of Australian insurer  QBE in Latin America for a total aggregate price of $409 million.

Zurich wants to position itself 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, the company said on Feb. 25.

“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," said Claudia Dill, Zurich’s chief executive officer for Latin America. "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.”

The acquired operations had combined gross written premiums of about $790 million in 2017, with a diversified product offering and distribution.

According to the company, Argentina represents around 50 percent 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 percent 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 percent 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, Zurich said.

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