ZURICH (dpa-AFX) - Zurich Insurance Group AG (ZURVY) announced Monday that its subsidiary Zurich Insurance plc has entered into an agreement with Catalina Holdings (Bermuda) Ltd and certain of its subsidiaries, a specialist acquirer of legacy insurance portfolios, to transfer its pre-2007 UK legacy employers' liability policies to Catalina.
As of December 31, 2017, the portfolio comprised gross liabilities of $2 billion relating principally to industrial disease related claims, including asbestos.
The transaction will be completed in two steps. The first step will consist of a reinsurance agreement between Zurich Insurance plc and Catalina General Insurance Ltd., a Bermudan reinsurer. In a second step the policies and liabilities will be transferred to Catalina London Limited, a UK insurer.
The transaction is subject to regulatory and court approvals, with the final transfer expected to occur within two years.
The company expects that in the fourth quarter of 2018 upfront expenses related to the transaction would lead to a small loss recognized in business operating profit. Over the full period to completion of the transfer of the policies, the company expects to achieve an overall positive contribution to the business operating profit.
The transaction is expected to have a negligible impact on Zurich's Economic Capital Model or Z-ECM capital position and a modest positive benefit to capital under the S&P model expected in the first quarter of 2019.
George Quinn, Group Chief Financial Officer, said, 'The sale of this portfolio reflects Zurich's strategy to eliminate or reduce exposure to legacy lines of business. This focus on actively managing capital allocation to improve overall returns will continue in 2019.'
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