Zurich and Santander form Latin American alliance
by Richard Kilner
Zurich Financial Services Group has announced that it has signed a Memorandum of Understanding with Spanish banking giant Banco Santander by which the two firms have entered into a 25 year strategic distribution arrangement in Latin America.
Under the terms of the deal Zurich acquires a 51% stake in Santander’s life insurance, pension and general insurance operations in Brazil, Mexico, Chile, Argentina and Uruguay, for a price of US$1.67bn.
There is also an earn-out mechanism as part of the agreement, to facilitate specific profit performance targets and a mechanism to protect against potential underachievement.
Zurich Chief Executive Officer Martin Senn described the move as a milestone in the firm’s endeavours in emerging markets, enlarging the firm’s presence in Latin America with a well-established partner.
Combined, Santander and Zurich have US$3.9bn gross written premiums in Latin America and US$2.9bn in pensions contributions.
The deal grants Zurich access to 36 million customers in the region, through 5,600 bank branches.