Zurich to buy £700m stake in Spanish insurer

See also: Zurich pulls out of RBS bidding

Zurich is to take a 50% stake in the life insurance, pension and general insurance operations of fourth largest bank in Spain, Banco Sabadell S.A., while establishing a long-term strategic distribution partnership with the company.

The announcement, which comes just a day after Zurich pulled out of the bidding for RBSI, means Zurich is set to become the second largest insurance group in Spain.

The ranking is measured by Zurich’s and Banco Sabadell’s combined gross written premium in both life and general insurance for 2007, resulting in an overall market share of 6.5%.

“We have always said we wanted to increase our market position in this important market,” Zurich’s chief executive officer, James Schiro, said. “It is also consistent with our multi-distribution strategy, and reflects our disciplined approach to acquisitions.”

Zurich will acquire a 50% participation in BanSabadell Vida, BanSabadell Pensiones E.G.F.P., S.A., and BanSabadell Seguros Generales. It will have management control of the jointly owned companies and fully consolidate them but Banco Sabadell will continue to be a 50% stakeholder.

The agreed transaction represents a significant expansion of Zurich’s insurance operations in Spain, and builds upon the two acquisitions the group has announced there over the past four months.

Zurich will finance the transaction with internal resources. The transaction is subject to the approval of the relevant regulatory authorities and is expected to close by the fourth quarter of 2008.