Zurich taps Goldman Sachs, PwC for general insurance unit

Zurich’s general insurance business on offer is thought to be worth about $500m.

Zurich Insurance Group is believed to be preparing to launch a sale process for its Australian assets, with Goldman Sachs and PwC on the ticket.

It is understood that on offer is Zurich’s Australian general insurance division, excluding its travel insurance arm.

Zurich invested heavily into travel insurance in Australia with the acquisition of the listed Cover-More Group in 2017 for $741m.

Some believe that the general insurance business on offer is worth about $500m.

Globally, Zurich is listed on the SIX Swiss Exchange and has three core business segments, including General Insurance, Global Life and the North American insurance business Farmers.

Zurich purchased ANZ’s OnePath Life insurance business in 2019 for $2.85bn.

Industry experts believe that the Swiss financial may be looking to stage an exit from the Australian general insurance market because it is sub scale and has a chequered history here.

Still, the unit is likely to be strongly sought after, given that general insurance is considered a highly profitable line of business.

 

The sale comes after insurers won a second court case in relation to compensation for clients suffering from Covid-19-related losses, averting billions in losses.

The major insurers have made huge provisions to cover potential pandemic losses, while others have already been slugged for payments in the United Kingdom.

Zurich’s sale follows others in the insurance space in recent years.

Westpac sold its general insurance division to Allianz for $700m last year and CBA this year divested its general insurance unit for $1bn to Hollard Australia in a move that sees banks focus more on their core lending operations.

Zurich is prominent in general insurance in Australia with 3 per cent of the market share, but Allianz Australia is the largest foreign-owned insurer.

Other major players here are IAG, Suncorp and QBE.

 

Zurich offers investment and superannuation products alongside general and life insurance to its Australian customers.

Of late, several large-scale natural disasters in Australia have reduced profit margins, according to IBISWorld.

But economic recovery from the Covid-19 pandemic is likely to yield steady demand for general insurance.

Major players are anticipated to keep dominating the industry over the next five years, with rising insurance premiums supporting revenue growth over the past five years.

Of all the products, motor vehicle insurance accounts for most of the revenue, while home insurance accounts for 19 per cent and reinsurance 15 per cent.

Industry revenue is expected to grow at an annual rate of about 0.9 per cent over the next five years to $70.2bn.