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ZURICH FINANCIAL PARTNERS WITH SANTANDER

ZURICH FINANCIAL PARTNERS WITH SANTANDER IN LATIN AMERICA ZURICH (Dow Jones) - Zurich Financial Services AG (ZURN.VX) said Tuesday it would rely in future on emerging markets to sustain its growth after announcing an agreement with Banco Santander SA (STD) to acquire its activities Insurance in Latin America for $ 2.09 billion. This transaction will allow Zurich Financial Services agencies to access the 5600 English banking group, which will sell its insurance policies as part of a distribution agreement for 25 years. The Swiss insurer will be able to strengthen its presence in Brazil, Mexico, Chile, Argentina and Uruguay will become the fourth largest insurer in Latin America. insurance business of Santander will be collected in a new holding company, Zurich Insurance Santander America, with headquarters in Madrid. Zurich Financial Services will hold 51% of this holding company will control and Santander the remaining 49%. In 2010, gross premiums combined the two groups in Latin America reached $ 3.9 billion.

Zurich Financial Services will pay first $ 1.67 billion, which corresponds to 80% of the total amount of the transaction. The remaining 20% will be paid throughout the 25 year agreement, based on achieving certain goals, the group was not specified.

This is a beneficial transaction for the capital base of Santander, which is facing falling housing market and the crisis of sovereign debt in Spain. The banking giant expects to record a gain of 1.21 billion dollars through this transaction. "Growth prospects are strong in this region," said Michael Klien, an analyst at Nomura in London, specializing in the insurance industry. The rate of insurance penetration in Latin America is still low, representing about 3% of GDP, against a rate of about 10% in Western Europe, says he. Zurich Financial Services will expand its presence in emerging markets but also provides that in mature markets including the U.S., will continue to generate growth, observed Group Managing Director, Martin Senn, at a press conference.

The group expects to finance the bulk of the initial payment through its existing cash and the remainder by issuing hybrid bonds. This acquisition will enhance earnings per share of Zurich Financial Services in its first year and have a minimal impact on its solvency ratios. Zurich Financial Services and Santander provide that their agreement will be finalized in the first half of 2011, and the transaction will be sealed off by the first quarter of 2012. Analysts welcomed the agreement, although the course of the Swiss insurer and the Santander recede Tuesday morning in a context of declining markets in Europe, affected by tensions in the Middle East. "This agreement is very attractive to shareholders of Zurich Financial Services because it improves the growth prospects of the group, the price paid is attractive and the ability to pay dividends is not affected," said Michael Klien. The analyst maintained his buy recommendation with a target price of 288 Swiss francs. At 11:30, the Zurich Financial Services shares lost 1.1% to 267.30 Swiss francs, and Santander yielded 1.5% to 8.82 euros. -Anita Greil, Dow Jones Newswires