Catalina acquires $2bn employers’ liability portfolio from Zurich

Bermuda run-off specialist Catalina Holdings has completed a $2 billion deal with Zurich Insurance – its first big deal since it raised a $700 million in October and affiliates of Apollo Global Management became its majority shareholder.

The recent deal involves it acquiring Zurich Insurance Group’s pre-2007 UK legacy employers’ liability policies portfolio. As of Dec. 31, 2017, the portfolio comprised gross liabilities of $2 billion relating principally to industrial disease related claims, including asbestos.

“The sale of this portfolio reflects Zurich’s strategy to eliminate or reduce exposure to legacy lines of business,” said George Quinn, Zurich group chief financial officer. “This focus on actively managing capital allocation to improve overall returns will continue in 2019.”

As part of the deal Zurich Insurance will enter a reinsurance agreement with Bermudan reinsurer Catalina General Insurance. The policies and liabilities will be transferred to Catalina London. The transaction is subject to regulatory and court approvals, with the final transfer expected to occur within two years.

In the fourth quarter of 2018 upfront expenses related to the transaction are expected to lead to a small loss recognized in Zurich's business operating profit, while over the full period to completion of the transfer of the policies the company expects to achieve an overall positive contribution to the business operating profit.