Zurich/Frankfurt, September 24, 2001. - Zurich Financial Services and Deutsche Bank, two leading global financial services companies, intend to pursue a number of initiatives, the most important of which are the transfer of businesses, a cooperation agreement, and the mutual distribution of their products and services. With these moves Zurich will strengthen its life insurance business and achieve a strategic distribution partnership for Continental Europe with Deutsche Bank. Heads of agreement have been signed with the following key features:
- Deutsche Bank will acquire 100% of Zurich Scudder Investments for USD 2.5 billion. Threadneedle, currently a part of Zurich Scudder Investments, will be retained by Zurich as it is an integral part of Zurich's UK-based insurance business and is not included in the purchase price. As per June 30, 2001, Zurich Scudder Investments had assets under management of USD 278 billion while Threadneedle had an additional USD 67 billion.
- Zurich will initially acquire 75.9% of Deutscher Herold Group including but not limited to Deutscher Herold Leben and Deutscher Herold Allgemeine and 100% of Deutsche Bank's life insurance operations in Italy, Spain and Portugal, based on a valuation of EUR 1.5 billion for 100% in all the above operations (excluding Bonnfinanz).
- An integral part of the agreement is the cooperation and mutual distribution of insurance, asset management as well as banking products and services.
These transactions will result in net proceeds to Zurich Financial Services of approximately USD 700 million after the buyout of Zurich Scudder Investments' minorities, expenses, and taxes.
These transactions are subject to the execution of definitive agreements. Completion will require regulatory approvals, various consents, and clearances, and is expected to occur in early 2002.
Significant strengthening of Zurich's position in Continental Europe
Complementing its strong position in Switzerland, in the U.S. and in UK, the agreement with Deutsche Bank will allow Zurich to expand as one of the five largest insurance organizations in Continental Europe in the rapidly growing life business, and to access one of the largest retail banking networks on the Continent.
- For customers these initiatives will provide a wider range of choice of solutions in financial protection and savings/investment products and services. Zurich's customers will benefit from continued access to Zurich Scudder Investments' funds in addition to a full range of other asset management products from Deutsche Bank and other third-party suppliers.
- Zurich will gain exclusive provider status to Deutsche Bank's over 10 million retail and private banking customers for insurance products through 2000 branches in Germany, Italy, Spain and Portugal.
- With Deutscher Herold, a leader in the German unit-linked market, Zurich will be well positioned to support the growth of the life insurance and pension business for which an increased demand is expected to result from the recent change in local pension laws.
- The insurance operations of Zurich in Italy and Spain will also gain significant market share in two of the largest and fastest growing life insurance and pension markets.
Strategic distribution partnership
Cooperation and distribution agreements between Zurich and Deutsche Bank will reinforce the strengths of each company. Zurich will distribute Deutsche Bank's asset management products and banking services, and Deutsche Bank will distribute Zurich's life and non-life insurance products.
- Zurich with Deutscher Herold will be the exclusive provider for insurance products to Deutsche Bank's retail and private banking customers in Germany. Zurich will also be the exclusive provider in Italy, Spain and Portugal and the preferred provider elsewhere in Continental Europe.
- Deutsche Bank will be Zurich's preferred provider for asset management products to Zurich's retail and private clients throughout Continental Europe and will be one of its preferred providers for banking products.
- Zurich and Deutsche Bank will continue to explore joint marketing and product development opportunities throughout Continental Europe. In this context, separate negotiations will continue with regard to Zurich's potential purchase of Bonnfinanz and to Deutsche Bank's potential acquisition of Zurich's asset management businesses in Germany and Italy.
Rolf Hüppi, chairman and chief executive of Zurich Group, commented: "This agreement enables us to fill a strategic gap in our presence in Continental Europe. We will significantly improve Zurich's position in our core insurance business by increasing our presence and penetration in the fast-growing European life insurance sector. We will realize the value of our investment in Zurich Scudder Investments for the benefit of our shareholders while the transaction will be modestly accretive to earnings in 2002 before any positive effects of synergies in subsequent years. Also, our product offerings in asset management will be strengthened through a preferred relationship with a very strong partner."
With regard to the long-term prospects, Hüppi said: "While the immediate benefits to Zurich of this agreement are substantial, we look forward to the long-term opportunities offered by the extensive marketing, distribution and product development aspects of our partnership with Deutsche Bank."
Notes to the editor:
- A joint Press Conference with Zurich Financial Services and Deutsche Bank will take place today at 11:00 a.m. in Zurich, Switzerland. Venue: Zurich Development Center, Keltenstrasse 48, Zurich
- Journalists who want to listen into the Press Conference are requested to call +41(0) 91 610 41 11 (presentations are held in German language and are translated simultaneously in English).
- The slide presentation, which will be used during the conference will be available on our website, www.zurich.com.
Zurich Financial Services, Media and Information, Iris Roth
8022 Zurich, Switzerland
Phone +41 (0)1 625 21 00, Fax +41 (0)1 625 26 41
http://www.zurich.com
