Zurich Insurance Says It’s Actively Looking for Acquisitions

By | December 23, 2008

Swiss insurer Zurich Financial Services Group, a serial acquirer in recent years, is not letting tighter credit markets hamper its pursuit of acquisitions, a company executive said on Monday.

“Zurich is definitely in a position where it can consider acquisitions,” Mario Vitale, chief executive of Zurich Global Corporate, said in an interview.

Its eagerness to do deals sets Zurich apart from some competitors that have had to tighten their purse strings after large investment losses and could find it tough to raise funds in debt and equity markets strained by the credit crisis.

Zurich is holding its capital more closely, last month saying it would suspend its stock buyback plan. But while its profit fell in the latest quarter, the company has remained in the black, in contrast to the losses posted by numerous peers that include ING of the Netherlands and Allianz AG of Germany.

That may prove advantageous for Zurich if it is able to use its cash to snap up assets at bargain prices. Giant insurer American International Group Inc. reached a deal to sell a unit, HSB Group, to Munich Re Group on Monday for nearly 40 percent less than the $1.2 billion it paid for the business in 2000.

Zurich, the fourth-largest European insurer, says it is on the lookout for deals that will bolster its North American personal lines and global life insurance businesses.

Several operations that may fall into those categories are for sale by AIG, which has been forced to shed assets to repay part of a U.S. government bailout that has grown to $152 billion.

AIG is expected to shortly reach a deal to sell its U.S. personal lines business. It is also selling off large parts of its global life insurance operations.

Vitale would not say whether AIG assets were among those being pored over by an internal team dedicated to assessing acquisitions. “We won’t comment on any specific companies with ‘For Sale’ signs,” he said.

Zurich does not disclose the exact metrics by which it measures potential purchases. It has undertaken numerous acquisitions in recent years. In the last six months it has reached modest deals in Spain, Turkey, Germany, Russia and Brazil.

While Zurich has, and plans to continue, to expand through acquisitions, the company runs its day-to-day business with a mind-set of growing from within, Vitale said.

To be sure, there are parts of the business where that is the biggest focus. Mike Foley, chief executive for Zurich North America Commercial, told Reuters last week that acquisitions were not key to its current growth plans.

Foley’s division is gaining market share by picking up customers that are choosing Zurich over carriers weakened by heavy investment losses.

Vitale said that was also true of the insurer’s operations in other parts of the world. “There is no question that we are gaining business that is being lost by some of our weakened competitors,” he said.

(Editing by Lisa Von Ahn)

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