Zurich Insurance Group won't buy UK insurer RSA after all. The sudden u-turn comes as the Swiss company incurred a loss at the general insurance business in the third quarter, not least because of the accident at the container storage in Tianjin in August.
Instead of buying RSA, Zurich will focus on improving the performance of the general insurance business, the Swiss financial services group said in a statement today. It has terminated the discussion, which were supposed to lead to a takeover offer. Zurich at the end of July made its intent to buy the UK insurer public.
Zurich expects the general insurance unit to post an operating loss of about 200 million dollars in the third quarter, the company said in a separate statement. Third-quarter figures will be published on November 5.
Chinese Storage Explosions
The current best estimate of the aggregate losses incurred through the series of exposions at the storage facility in Tianjin amounts to 275 million dollars, Zurich said in the statement. The figure may yet change as the repairs of the storage will take some time to be completed.
The result of Zurich will also be affected by liabilities of this year and last year at the U.S. auto liability unit and some other, unspecified lines of business, amounting to 300 million dollars. Today's update follows a recent review of the reserves, the company said.
Disappointment for Zurich and Investors
Kristof Terryn, the new chief executive at the General Insurance unit will now conduct an in-depth review of the unit.
Today's announcement will come as a disappointment to investors. The company's plan to expand have effectively been stopped. Zurich was one of only three stocks to drop on Switzerland's benchmark SMI in the early afternoon today.
