The "Farmers Insurance News-Alert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group. This includes fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources, when known are sited.
|Friday, October 17, 1997
Zurich to Pay BAT $18.6 Billion for
By: From Times Staff and Wire Reports
California Insurance Commissioner Chuck Quackenbush welcomed the merger as "good news for California," saying it "adds even more competitive pressure to an already red-hot marketplace."
Financial rating agencies were less quick to endorse the deal, however. Moodys Investors Service placed the financial services operations of BAT under review with "uncertain" implications, the firm said Wednesday.
Martin D. Feinstein, president and chief executive of Farmers, said in a statement Thursday: "We are enthusiastic about this merger and the opportunity it provides Farmers. . . . This joins us with a truly global organization dedicated to insurance, and one which will enhance our future growth plans."
Bolstered by strong balance sheets, Europe's largest insurers are buying competitors and seeking cross-border alliances to raise revenue, cut costs and gain market share. Increasingly, insurers are trying to raise the value of assets under their management, seeking the steady stream of fees that money management offers.
"Financial services companies are seeking more assets to manage to raise profits, and a better distribution network to lower costs," said Patrick Carisch, who helps manage CS Asset Management's $160 billion in assets. "Zurich gets both."
The merged financial services operations would be known as Zurich Financial Services Group, headquartered in Zurich and employing about 66,000 people.
BAT shareholders would own 45% of the new company through a separate holding company, Allied Zurich, and Zurich shareholders would own 55% through Zurich Allied.
The deal would split BAT's tobacco interests, British American Tobacco, into a separately listed company. BAT, which owns Brown & Williamson Tobacco Corp. and makes Lucky Strike, Kool and Benson & Hedges, among other brands, last year accounted for nearly 13% of the world cigarette market.
Although BAT said opportunities for the tobacco business increased significantly in recent years, Chairman Lord Cairns said BAT might reduce its dividend at first.
The acquisition would bring Zurich's premium income to about $40 billion, making it the fourth-largest insurer in Europe with significant operations in the U.S., Britain and Switzerland.
The purchase wouldn't dilute Zurich's earnings per share and could boost earnings as early as the second year, said Rolf Hueppi, chairman and chief executive of Zurich. Zurich should derive annual savings of $250 million three years after the union is completed, he said.
Zurich Financial Services would rank third in the U.S. in premium terms for property and casualty insurance and would also be the third-largest nonlife insurer in Britain. Zurich is also one of the U.S.'s 10 biggest money managers. In Switzerland, the company would remain the second-largest nonlife insurer and the third-largest life insurer.
"Our focus is not size," Hueppi said at an
analyst meeting. "It's earnings power, position for the future and the creation of
value that counts." There are "dramatic changes" coming in the financial
services industry in the next five to 10 years, he said. "This puts us at the
forefront of the people who can act--and we will."
BAT Industries/Zurich--BAT Industries agreed to merge its financial services businesses with Zurich Insurance Co. to create a new entity that will be owned by the current shareholders of BAT and Zurich. There was no acquisition involved. The terms of the merger were mischaracterized in a story in last Friday's editions.
---- END CORRECTION TEXT ----
|Attention! All information contained herein is for educational purposes only. No copyright infringement is intended by any material on these pages. The copyrights of the whole multimedia content on these pages are belonging to their originators, authors, creators... etc. All original content is the property of it's originators. Copyrighted material has been used for non-commercial purposes only. This website is best viewed with your monitor resolution set to 800x600 and your video mode set to true color.|