On Thursday,
Zurich Insurance announced that its operations in South Africa and Botswana will be acquired by Fairfax Financial Holdings Limited.
The deal was closed for an undisclosed sum. The sale will be a 100% acquisition, subjected to regulatory and competition commission approval. Fairfax said that it expects the deal to close by the end of the year.
Zurich sale confirms speculations that the Swiss-based insurer has plans to exit South Africa, after it had issued a statement saying that the company was reconsidering whether it was “best placed to host the South African assets”.
“At the group’s Investor Day in May 2015, Zurich stated that reshaping its geographic footprint would be one of its highest priorities over the next two years as it seeks to build a more sustainable business while also improving overall profitability,” Zurich said in a statement published Thursday.
According to
moneyweb.co.za, Zurich SA delisted from the Johannesburg Stock Exchange in 2015 and turned into a wholly-owned subsidiary of Zurich Insurance Group when the latter acquired the remaining 15% it did not already own.
“While South Africa and Botswana remain attractive markets, a comprehensive assessment found that there was limited scope for Zurich to achieve an operating scale that warranted continued investment,” the insurance group said.
“The acquisition is the ideal outcome for our customers, our employees, the group and the insurance markets in South Africa and Botswana,” remarked Zurich SA CEO Edwyn O’Neill.
“Selecting Fairfax as our acquirer allows us to continue to run the business with a strong local focus, while enjoying the backing and guidance of a global sector expert,” O’Neill added.
On its company website, Fairfax said that the acquisition represents an expansion of its commercial insurance presence in Africa. Earlier, the company had purchased a 7.15% state in Africa Re last year.
“Africa is a continent that represents a long-term growth opportunity for Fairfax, but where we have traditionally done little primary commercial insurance business. This acquisition represents a key step in expanding our presence in this important market,” said Fairfax chairman and CEO Prem Watsa.
“[Zurich Insurance Company South Africa] is a high-quality and well-known regional business, with an outstanding management team led by Edwyn O’Neill,” Watsa noted.
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