Zurich Insurance Group announced that its subsidiary Zurich Insurance plc has entered into an agreement with Catalina Insurance Ireland DAC (Catalina) to transfer its German legacy medical malpractice book to Catalina.
The portfolio concerned represents reserves of approximately US$450 million as of Dec. 31, 2016. Financial details of the transaction were not released.
The transaction, which is subject to regulatory and court approvals, reflects Zurich’s continued efforts to manage risk and free up capital from non-core operations.
“The transaction with Catalina is another example of how the group is actively managing its capital and legacy liabilities,” said George Quinn, group chief financial officer. “This transaction reduces risk and continues the process of simplifying the group and releasing capital from non-core activities as communicated at our Investor Day in 2016.”
Zurich said the transaction is expected to have a small positive impact on capital and earnings upon completion.
“This transfer from Zurich is one of the largest legacy transactions in continental Europe,” said Chris Fagan, chairman and chief executive of Catalina Holdings (Bermuda) Ltd.
“Together with our purchase of Glacier Re in 2010, reinsurance of $200 million of legacy liabilities from Delta Lloyd in 2014 and transfer of €463 million [$536.5 million] of liabilities from Quinn Insurance in 2015, this transaction clearly positions Catalina as the largest acquirer of legacy liabilities in Europe, with over $3.1 billion of European run-off liabilities acquired to date,” he added.
“We are pleased to be working with leading insurance groups like Zurich to help them manage risk and reduce capital and management resources devoted to non-core operations,” Fagan affirmed.
“We continue to see growing opportunities as insurance and reinsurance companies dispose of non-core legacy liabilities, helping develop a secondary market for legacy liabilities with compelling economic benefits for both seller and buyer,” he said
Source: Zurich Insurance Group/Catalina
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