Zurich unloads Italian back book to Portugal's GamaLife to free $1.2bn in capital

Zurich Insurance Group will unload its Italian life and pension back book to Portuguese insurance company GamaLife to free some $1.2 billion in capital as it reworks its Italian profile towards protection and unit-linked investment products, Zurich said Monday (January 3).

The transaction will send approximately $9.5 billion of net reserves to GamaLife. The capital release will add some 11 percentage points to the group's Swiss Solvency Test ratio.

Including the expected cash consideration of €128 million, Zurich expects a boost to group liquidity of some $200 million, Zurich said.

Zurich calls the deal a "first step in a series planned to significantly improve capital allocation across the Group."

“The sale demonstrates our commitment to improve capital utilization across our life back book," said George Quinn (pictured), group chief financial officer, in the Zurich statement. "The transaction also reduces our exposure to interest rates and credit risks and allows us to focus on the parts of the Italian life and pensions market where we can best serve our customers."

The completion of the transaction is anticipated to take place in the second half of this year, subject to regulatory approvals.

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