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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.

 

Zurich Shareholders Approve Plan to Buy B.A.T. Units

Zurich, June 11 (Bloomberg) -- Zurich Insurance Co. shareholders approved the Swiss company's planned $18.7 billion purchase of B.A.T Industries Plc's financial-services arm, which will create Europe's fourth-largest insurer.  

Chairman Rolf Hueppi told shareholders at Zurich's annual general meeting that he expects a ``good result'' in 1998 as sales grow and costs are cut as a result of the purchase of the B.A.T units. Hueppi said earnings so far this year have been ``well within expectations.''     

Zurich's purchase of the B.A.T units will give it $34 billion in annual premiums and $375 billion in assets under management, making it the world's No. 7 money manager. With 30 million customers, Zurich will rival the likes of France's Axa- UAP and Germany's Allianz AG to provide pensions and savings plans to developed countries' aging populations.   

Now there's only one major hurdle left, and that should be a formality,'' said Heinrich-Horst Wiemer, an analyst at Bank Sal. Oppenheim & Cie, who has a ``buy'' rating on Zurich shares. ``The purchase will certainly enhance Zurich's earnings potential.''     

B.A.T Shareholders to Vote     

B.A.T shareholders meet tomorrow to vote on the sale of the financial-services arm. B.A.T plans to focus on tobacco, in which it is the world's second-largest producer after New York- based Philip Morris Cos. The sale frees the financial-services business from any obligation to finance the compensation payments that tobacco makers are expected to have to make as a result of health-related claims against them.  

Since Zurich and B.A.T announced their merger plan last year, the companies ``have been working with tremendous energy to prepare the way for a successful integration,'' Hueppi told the 2,134 shareholders present. ``Despite the hurdles inherent to an international merger, our excitement as well as our expectations have continued to grow.''      

The enlarged company, to be called Zurich Financial Services AG, will combine Zurich's insurance units with U.S.- based Farmers Insurance as well as Allied Dunbar and Eagle Star, two U.K.-based insurance units of B.A.T, while marrying Zurich's Scudder Kemper asset management division with B.A.T's U.K.-based Threadneedle Asset Management.   

Zurich Financial Services had pro forma operating income of $3.135 billion last year. Shareholders' equity amounted to $21.412 billion last year. The pro forma figures include restated earnings of $1.238 billion for Zurich and $1.006 billion for B.A.T's financial services.  

Zurich will pay about $18.7 billion in shares, assumed debt and other securities, the companies said in December. The debt amounts to 800 million pounds ($1.3 billion) attributable to B.A.T's financial-services units. Zurich will also make a 500 million-pound payment to B.A.T to settle balances outstanding between the tobacco and financial-services units, Zurich has said.  

Zurich shares fell 16 francs to 953 on the Swiss Exchange, while B.A.T shares fell 26 pence to 580 pence in London. 

12:07:00 06/11/1998

 

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