Catalina Acquires $2 Billion Zurich Insurance Portfolio

In December 2018, Zurich Insurance plc reached an agreement which will transfer its pre-2007 UK legacy employers’ liability (EL) insurance policies to subsidiaries of Catalina Holdings (Bermuda) Ltd, a reinsurance group that specialises in the acquisition and management of companies and portfolios in run-off.[i]

This will take place in 2 stages:

  1. A reinsurance agreement between the Zurich Insurance Group subsidiary and Catalina General Insurance.
  2. The transfer of policies and liabilities to Catalina London Limited, based in the UK.

As of 31 December 2017, gross liabilities of the pre-2007 books were valued at $2 billion USD (£1.5 billion GBP).

Most of this relates predominantly to long-tail industrial disease claims, including asbestos-related diseases, such as mesothelioma.

Group Chief Financial Officer of Zurich, George Quinn, has stated that this transaction is geared towards eliminating or reducing exposure to the financial risks of insurance underwritten decades prior and is part of a wider corporate strategy to manage capital allocation and improve overall returns in 2019.

Zurich anticipates a small initial loss in operating profit for Q4 of 2018, which would be attributable to the upfront costs of finalising the deal. However, an overall positive contribution to business operating profit is expected to be recognised once both stages of the transaction are complete.

 

[i] ‘Zurich to transfer UK legacy employers’ liability portfolio to Catalina’ (17 December 2018 Zurich) <https://www.zurich.com/en/media/news-releases/2018/2018-1217-01> accessed 30 January 2019.