Viridium, which specialises in managing life insurance portfolios, has reached an agreement to buy Zurich Insurance Group’s (Zurich) life insurance back book portfolio in Germany.
The deal includes nearly 720,000 policies from Zurich Deutscher Herold Lebensversicherung (Zurich Deutscher Herold) with around €21bn in assets under supervision.
The financial details of the deal were not divulged. However, Reuters reported that Viridium will pay a little less than €500m to Zurich as part of the agreement.
The portfolio mainly includes traditional guaranteed products.
The acquisition will enable Viridium to increase its portfolio to approximately 4.5 million policies and its assets under supervision to a total of around €92bn.
Meanwhile, Zurich’s Swiss Solvency Test ratio is set to rise by around 8% points upon completion of the deal.
Zurich Group chief financial officer George Quinn said: “This is, perhaps, the most important step in our efforts to reduce the capital intensity of Zurich’s legacy life portfolios and to lower our exposure to interest rates.
“As indicated at last year’s investor day, the priorities for capital released by disposals are the elimination of earnings dilution as well as supporting growth.
“Germany is one of our most important markets and has been a significant driver of our customer growth.”
Zurich currently serves over 55 million customers in more than 210 countries across the globe.
Viridium CEO Tilo Dresig said: “Viridium has demonstrated that policyholders will benefit from our exclusive focus on fulfilling their policies in the long term and that they will participate from the financial and operational advantages of our business model.
“The policyholders of Zurich will now also be able to profit from these advantages.
“This is the fifth acquisition of a closed-book life insurance portfolio and is the next logical step in our successful development that began in 2014.”
The completion of the transaction is subject to regulatory review by the German Financial Supervisory Authority (BaFin) and other conditions.
As agreed, the portfolio and the associated balance sheet will be transferred to a new company before closing. Subsequently, Viridium will acquire the new company and integrate it under a new brand.