(Reuters) — Zurich Insurance Group Ltd. said it would take a hit of about $300 million in the third quarter from selling its Russian retail business to the OLMA Group, part of the insurer's strategy to shed underperforming units.
The Swiss insurer began a three-year restructuring program at the end of 2013 to invest in high-margin businesses and sell underperforming lines, the cost of which will total $600 million.
It said on Thursday it was selling the Russian retail unit, which had a gross written premium volume of 7.1 billion roubles ($207 million) in 2013, to Russian investment group OLMA for $30 million. Zurich said it would keep and expand its Russian corporate business.
A spokeswoman for Zurich said the retail business had not been profitable for the past two years.
“The transaction is a proof point of our 2014-2016 strategy. While we invest in priority markets, we either turn around or exit those that are underperforming,” Mike Kerner, CEO of general insurance at Zurich, said in a statement Thursday.
The sale is expected to close in the third quarter of this year, and the loss will only have a small impact on shareholder equity, Zurich said.