Zurich planning sell-off

Zurich Financial Services, the Swiss insurance company, is preparing to package up and sell part of its UK life insurance business in order to release up to £1 billion. It has been reported that the insurer has appointed Lehman Brothers, the investment bank, to advise on the securitisation scheme, which it intends to finalise in the last quarter of 2007.

The scheme would allow Zurich to use the capital to concentrate on writing more profitable areas of business. Zurich’s British operation has recently been restructured and in early 2007, it transferred a £3.9 billion book of annuities business to Swiss Re, releasing about £300m.

In addition, Zurich is examining a possible approach for Friends Provident, which recently agreed to an £8.3 billion merger with Resolution (the group that has grown significantly by buying up life insurance funds that no longer write new policies).

It is believed by many bankers that the securitisation deal is likely to be part of a strategy to drive expansion in selected British markets.

Britain is Zurich’s biggest market after Germany for life and pensions sales, however, it is seen as a sub-scale player. It is not in the top 10 life insurers and has only 3% of the market. In 2006, it wrote life and pensions business of £1.1 billion.

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