Zurich Insurance Group abandoned an offer for RSA Insurance Group because it expects a loss in its own general insurance business in the third quarter and will conduct a review of the unit.
“Discussions with RSA have now been terminated,” the Swiss insurer said in a statement. The proposed takeover would have valued RSA about £5.6 billion.
Zurich expects a loss of $200 million in its general insurance business, the company said in a statement Monday. It will be affected by claims from a series of explosions in China last month that may come to about $275 million. The unit will also be hit by a negative impact of around $300 million from US auto liabilities.
Zurich terminated its discussions with RSA “in light of the above recent deterioration in the trading performance,” it said Monday.
Zurich will focus on improving its general insurance business. The proposed takeover would have valued RSA about £5.6 billion.
Zurich has $3 billion of excess capital that it plans to either distribute to shareholders or use for an acquisition. Its priorities for that money remain unchanged, the company said. The Swiss company appointed Kristof Terryn chief executive officer of its general insurance business earlier this month, replacing Mike Kerne.