Zurich Acquiring 50% Stake in Spain’s Banco Sabadell’s Insurance

July 11, 2008

Zurich Financial Services Group has agreed to acquire a 50 percent stake in the life insurance, pension and general insurance operations of Banco Sabadell S.A., while establishing a long-term strategic
distribution partnership with the fourth largest bank in Spain.

As a result of the agreement, Zurich is set to become the second largest insurance group in Spain.

Zurich will acquire a 50 percent participation in BanSabadell Vida S.A. de Seguros y Reaseguros, BanSabadell Pensiones E.G.F.P., S.A., and BanSabadell Seguros Generales, S.A. de Seguros y Reaseguros. Zurich said it will have management control of the jointly owned companies and fully consolidate them, but Banco Sabadell will
continue to be a 50 percent stakeholder.

“We have always said we wanted to increase our market position in this important market,” commented Zurich Chief Executive Officer James J. Schiro. “It is also consistent with our multi-distribution strategy, and reflects our disciplined approach to acquisitions.”

The agreed transaction builds upon two other acquisitions by Zurich in Spain over the past four months. With these acquisitions, Zurich becomes the fourth largest life and fourth largest general insurer in Spain.

The purchase price for 50 percent of Banco Sabadell’s life insurance and pension companies amounts to EUR 650 (approx. U.S. $1,020) million, plus an earn-out component of up to EUR 120 (approximately $188) million. The purchase price for 50 percent of Banco Sabadell’s general insurance company amounts to EUR 100 (approximately$157) million, plus an earn-out component of up to EUR 30 (approx. $47) million.

In 2007, BanSabadell Vida wrote EUR 1,450 ($2,275) million in premiums and EUR 177 ($277) million of life APE. BanSabadell Seguros Generales was newly founded in 2007.

Zurich said it will finance this transaction with internal resources. The transaction is subject to the approval of the relevant regulatory authorities and is expected to close by the fourth quarter of 2008.

Based on Zurich’s and Banco Sabadell’s combined gross written premium in both life and general insurance for 2007, they will combined represent an overall market share of 6.5 percent.

Source: Zurich Financial Services Group

Topics Mergers

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