Zurich offloads German legacy medical malpractice book to Catalina
Switzerland-based Zurich Insurance Group has entered into a definitive agreement with Catalina Insurance Ireland to transfer its German legacy medical malpractice liabilities portfolio.
The portfolio in run-off that represents reserves of approximately $450 million as of December 31, 2016 will be transferred to Bermuda-based Catalina Holdings' wholly owned subsidiary Catalina Ireland.
The transaction is part of Zurich's continued strategy to manage risk and free up capital from non-core operations. It is expected to have a small positive impact on capital and earnings upon completion, the company said.
George Quinn, Zurich chief financial officer, said: "The transaction with Catalina is another example of how the Group is actively managing its capital and legacy liabilities. 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."
The portfolio transfer is subject to regulatory approval in Ireland and the approval of the High Court of Ireland. According to the statement, the total assets of Catalina pro forma for this transaction will be in excess of $4.1 billion.
Chris Fagan, CEO of Catalina, commented: "This transfer from Zurich is one of the largest legacy transactions in continental Europe. 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 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.
"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. Our strong track record and global footprint means we are well positioned to provide exactly this value to groups with legacy liabilities. 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."