The sale, which is subject to regulatory approvals, is for a total aggregate price of $409m (£293m, €333m).
The acquired operations had combined gross written premiums of about $790m in 2017, with a highly diversified product offering and strong distribution, Zurich said.
The acquisition is expected to be completed by the end of 2018 and is expected to be funded from internal resources.
Zurich added that the move will see it become the leading insurer in Argentina and build incremental scale in Brazil, Colombia and Mexico.
It will also become a top three insurer in Ecuador.
Acquisition breakdown
Argentina represents around 50% of the acquired operations and will approximately double Zurich’s property and casualty (P&C) business in the country.
It will also create the leading insurance franchise in the country across the P&C and life businesses with 8.4% market share and the third-largest stand-alone P&C business with a similar market share, Zurich said.
The Swiss insurer said the acquired operations complement its existing businesses in Argentina and add additional distribution and product capabilities; particularly among small and medium sized commercial customers.
Zurich expects to achieve an overall return on investment comfortably in excess of the group’s indicated hurdle rate of 10% within the first full-year post-completion of the transaction.
Preferred insurer
Claudia Dill, Zurich’s chief executive for Latin America, said: “This transaction positions us as the leading insurer in Argentina, a market that is demonstrating strong growth, a stable economy and a positive environment for insurance.
“It deepens our capabilities in the retail and commercial businesses and supports our strategy to become the preferred retail and commercial insurer in the region, protecting our customers and helping them to reach their full potential.”
M&A activity
In the past year, Zurich has undergone substantial change in its operations, which has seen the company sell and buy operations across the globe.
In January 2018, Zurich Life Singapore was sold to recently launched local insurer Singapore Life. The portfolio had been in run-off since December 2015, when the firm closed to new business in the city-state.
The previous month, Zurich acquired 100% of ANZ Bank’s Australian life insurance business, OnePath.
In June 2017, Zurich Insurance Middle East was sold to Cigna. The sale of the general insurance unit, which was closed to new business in November 2015, prompted reports that Zurich was pulling out of the region.
The insurer later reaffirmed its commitment to providing life and commercial insurance products in the Middle East.
Zurich’s financial results, released on 8 February, outlined the company’s M&A activity during 2017.
In addition to the announcements above, the results stated that Zurich underpinned its position as one of the top-three global providers of travel services with the acquisitions of Cover-More Group and Halo Insurance.
Building on these positions, Zurich said it has begun offering travel insurance to customers of airline easyJet and in December acquired a majority stake in FitSense, an analytics company that uses data from mobile applications and online devices to provide customised insurance products.
The group also strengthened its proposition to drivers and the automobile industry with the acquisition in December 2017 of Bright Box HK, a provider of telematics solutions linking drivers, dealers and manufacturers.
