Insurer Zurich in talks to buy Liberty’s Irish and Iberian business

Zurich Insurance Group is in talks to acquire Liberty Mutual’s businesses in Ireland, Spain and Portugal in a deal that may be worth more than €1 billion, according to sources.

The move would make Zurich the second-largest general insurer in the Republic, behind Axa. It is not clear if the discussions are exclusive. A spokesman for Zurich and a spokesman for Liberty both declined to comment.

The Swiss insurance giant has about a 10 per cent share of the Irish general insurance market, while Liberty’s slice is estimated by industry sources to be about 6 per cent.

Boston-based Liberty Mutual entered the Irish market in 2011 by taking over the main businesses of Quinn Insurance, which had fallen into administration a year earlier after a large hole was discovered in its balance sheet. Zurich was among the short-listed bidders that had circled Quinn Insurance at the time.

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Liberty’s Irish operation was subsumed into Madrid-based Liberty Seguros in 2018, leaving it as a branch of the Spanish company.

Bloomberg reported last November that Liberty was exploring the sale of the unit for more than €1 billion, and that it was working with Bank of America to find a buyer.

[ 2011: Liberty Mutual formally assumes control of Quinn Insurance ]

The Irish business generated €220 million of gross written premiums in 2021, and posted an underwriting loss of €60 million in 2021, according to the most recent annual report for a holding company for Liberty’s European assets.

Liberty recorded €825 million premiums in Spain and wrote €235 million of business in Portugal in 2021. It had almost 550 employees on the island of Ireland, and a further 1,250 workers on the Iberian peninsula.

Zurich Ireland, which also includes a life insurance business, has about 1,100 employees and is led by chief executive Anthony Brennan.

Its bid to increase its exposure to the Republic follows a number of reforms aimed at reducing volatility and coverage costs in a historically highly volatile market, even by the cyclical nature of insurance internationally.

The average award by the Personal Injuries Assessment Board (PIAB) fell by 38 per cent in the first half of last year across motor, public and employers’ liability lines, compared to the same period in 2020, before new judicial awards guidelines were implemented.

Meanwhile, the Central Bank of Ireland imposed a ban last July on the previously widespread practice of motor and home insurers increasing premiums for loyal customers by stealth.

Insurers made a €176 million profit from motor insurance in 2021 – equating to 13 per cent of gross earned premiums, according to Central Bank data. Both figures were the highest for a full year since at least 2009, and contrast with a period in the middle of the last decade when motor insurers made large losses, which prompted a spike in premiums. However, commercial insurance lines have been more challenged in recent years.

The Irish Times reported last month that South African insurance company OUTsurance is planning to enter the Irish market by the middle of next year.

Separately, Liberty was reported last month to be exploring a sale of its Latin America businesses, including its operations in Brazil, Chile, Colombia and Ecuador. Zurich and Italy’s Generali were named by Bloomberg as having expressed an interest in the South American assets.