Zurich to sell Russian retail business

Switzerland: Zurich Insurance Group and OLMA Group have signed an agreement under which OLMA will acquire Zurich’s general insurance retail business in Russia. OLMA has stated ambitions to further develop the retail insurance business in Russia as well as building its own corporate business by leveraging its existing customer base.

Zurich’s retail portfolio comprises around 1.2 million policies representing gross written premium volume of about USD220 million in 2013. Its products include casco, motor third party liability, property and personal accident and are sold to individuals and small and mid-sized companies via agencies, partnerships and direct channels. Subject to regulatory approvals, the transaction is expected to close in the third quarter 2014. The sales price amounts to about USD 30 million. On disposal, unrealised currency translation adjustment (CTA) losses of approximately USD265 million, currently reflected in shareholders’ equity, will become realised. Mainly as a result of this accounting charge, the transaction is estimated to generate a loss through net income of about USD300 million, but with only a small impact on the Group’s shareholders’ equity.

Zurich will retain its corporate business. It has been an active player in the Russian corporate market since 1996.