Australian insurer QBE Insurance Group Ltd. is selling its Latin America operations to Zurich Insurance Group AG for an aggregate price of US$409 million.
The sale will include QBE's operations in Argentina, Brazil, Colombia, Ecuador and Mexico. QBE will retain its Puerto Rico operations, which will become part of the group's North American operations.
The group expects a profit of about US$100 million from the sale, which would lower risk charges and lead to the disposal of about US$42 million of goodwill and intangible assets, it said in a statement.
The deal is expected to boost Zurich's presence in Argentina, which represents about 50% of the acquired operations, and build its scale in Brazil, Colombia, Mexico and Ecuador. The Swiss insurer expects to become a leading insurer in Argentina and a top-three insurer in Ecuador following the sale.
Zurich said it expects to achieve an overall return on investment in excess of the group's indicated hurdle rate of 10% within the first full year after closing the transaction. The deal is expected to be completed by the end of 2018 and will be funded from internal resources.
The acquired operations had a combined gross written premium of about US$790 million in 2017.