Zurich to sell Italian life and pensions back book to Portuguese insurer GamaLife

Zurich Insurance will release about $1.2 billion of capital by selling its Italian life and pensions back book to Portuguese insurer GamaLife, the Swiss company said on Monday.

The deal will also add 11 percentage points to its Swiss Solvency Test ratio and reduce credit risk exposure significantly, Zurich said.

The transaction is expected to increase Zurich's liquidity by about $200 million, the insurer said, including a cash consideration of about $148m. A back book consists of old policies that remain on the books as premium-paying policies.

"The sale demonstrates our commitment to improve capital utilisation across our life back book," Zurich finance chief George Quinn said.

"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 deal does not change contractual obligations towards policyholders and distributors, said Zurich, which will continue to be active in the Italian life insurance and pension market.

The Swiss company agreed on a deal with Deutsche Bank to buy its financial adviser network in Italy last year.