ZURICH (Reuters) - Zurich Insurance (S:ZURN) said it was buying QBE Insurance Group's (AX:QBE) Latin American business for $409 million (£292.4 million), becoming the leading insurer in Argentina and No.3 in Ecuador.
The acquired business had gross premiums of $790 million last year, with Argentina representing about half and the rest divided among Ecuador, Mexico, Brazil and Colombia, Zurich said in a statement on Sunday.
"This transaction positions us as the leading insurer in Argentina, a market that is demonstrating strong growth, a stable economy and a positive environment for insurance," Claudia Dill, Zurich's Chief Executive Officer for Latin America, said in the statement.
Zurich said it expected to achieve an overall return on investment comfortably in excess of 10 percent within the first full year post completion of the transaction. Completion is expected by the end of 2018 and funding is to come from internal resources, Zurich said.
In a separate statement, QBE said it expected a pre-tax profit from the sale of about $100 million.
Australia's biggest insurer will retain its Puerto Rico operations to service claims from Hurricane Maria, it said.
"The decision to exit Latin America is consistent with our focus on simplifying the group, reducing risk and improving the consistency of our results," QBE Chief Executive Pat Regan said.
Europe's fifth-biggest insurer last year bought Australia and New Zealand Banking Group's (AX:ANZ) life insurance arm for $2.1 billion, a deal that propelled it to the top rank in the attractive Australian market.