ZFS Sells U.K. Fund Manager – Capital Goals Achieved

June 16, 2003

Zurich Financial Services took another step towards restoring its battered capital position to robust health with the announcement that it has agreed to sell Threadneedle, its U.K. find management subsidiary, to American Express for £340 million ($565 million).

The deal ends protracted negotiations between the two, but comes at a price lower than most analysts had expected, apparently due to the currently depressed state of the world’s capital markets. Included in the deal are provisions that Amex will continue to manage ZFS’ funds invested at Threadneedle for up to 8 years. The fund manages around £44 billion ($73 billion), about half of it from ZFS.

ZFS has now sold most of its U.S. life business – it reached a deal with Bank One last month – for $500 million, several other properties, and, with this sale, has reached its goal of freeing up around $1 billion to restore its capital base and position it to be more competitive in seeking new business in its core insurance sector.

London’s Financial Times quoted ZFS CEO James Schiro as stating: “The sale of Threadneedle marks yet another step in the implementation of our strategy to re-focus on our core businesses.”

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