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Winterthur sells another portfolio jewel

Winterthur improves its solvency capital through the Italian sale at the weekend

(Keystone)

Winterthur Insurance, the troubled subsidiary of Credit Suisse Group, has sold its profitable Italian operations in a surprise deal with the Bologna-based insurer, Unipol.

Winterthur will receive SFr2.2 billion ($1.7 billion) once the transaction has gained regulatory and anti-trust approval later in the year.

The sale comes almost a fortnight after the Swiss insurer relinquished its strong British performer, Churchill Insurance, to the Royal Bank of Scotland for SFr2.4 billion.

The combined sales are set to strengthen Winterthur's solvency capital by around SFr3.5 billion and should result in a net capital gain of SFr1 billion by the end of 2003.

The turnaround has been initiated by the group's new chief executive, Leonhard Fischer.

"In view of our strategy to strengthen our capital base, and in the context of an Italian insurance market currently undergoing a phase of consolidation, we have chosen to realise the value of Winterthur's strong performance in Italy," he said.

Fischer added that the Unipol offer was "uniquely attractive", giving Winterthur "greater financial flexibility to grow selectively in other markets".

Competitive business

Winterthur Italy is known for highly competitive life and non-life insurance policies with a premium volume of around SFr3 billion.

It has a client base of around 1.9 million in Italy and employs a staff of approximately 1,600.

Carlo Timbri, general director of Unipol Insurance, said his company would be retaining the staff at Winterthur Italy.

Fischer told Britain's Financial Times that the recent disposal of three of its most successful operations abroad did not indicate a piecemeal break-up of the Swiss insurance group.

Sell-off

The third sale concerned Winterthur's United States insurance operations, which were sold for $127 million dollars (SFr168.5 million) just last month.

Since Credit Suisse acquired Winterthur Insurance in 1997, it has been a weak link in the Group's diversified banking and investment activities.

It made a record net loss of SFr2.1 billion last year, blaming heavy stock market losses.

Switzerland's second-biggest banking group injected SFr3.7 billion into the ailing insurance company in 2002.

swissinfo with agencies

Key facts

The Winterthur Group based in Switzerland sold its Italian operations to Unipol for more than SFr2 billion at the weekend.
Winterthur Italy had an aggregate premium volume of more than SFr3 billion last year.
The Italian unit writes both life and non-life business and specialises in tailor-made insurance products.
The total consideration of $1.7 billion will be payable in cash at the completion of the transaction sometime in the second quarter of 2003.
Unipol Assicurazioni SpA will pay 90% directly, while 10% will be paid by its majority shareholder, Finsoe SpA.

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