Swiss insurer Zurich is looking to sell a portfolio of German life insurance policies to Viridium.
Zurich Insurance Group is in discussions with Viridium Group to sell it a $21 billion portfolio of German life insurance policies, according to a «Bloomberg» report (behind paywall) Wednesday.
The market for portfolios of old insurance policies, known as back books, is one of the most active in financial services. Selling such policies allows an insurer to free up capital, and are often bought by consolidators such as Viridium.
The talks are ongoing and no agreement has been reached and could still end without a deal. Should one be reached, it would be subject to regulatory approval. Zurich could make an announcement as early as this week, the report said.
On its website, Viridium says the key difference compared to «conventional» life insurers is that its life insurance companies do not sell new policies. Instead, they focus exclusively on the efficient management of existing life insurance portfolios.
When an insurer sells such a portfolio, it releases capital that it can use for other purposes.
Italian Back Book Sold
In January, Zurich sold its Italian life and pension back book to GamaLife, saying would release around $1.2 billion of capital and add 11 percentage points to the firm's Swiss Solvency test ratio. In addition, it would have a significant reduction in the group's exposure to credit risk, as finews.com reported. The transaction is expected to be completed in the second half of the year.
«The sale demonstrates our commitment to improving capital utilization across our life back book. 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», said Zurich Group CFO George Quinn.
