Zurich Insurance Group Considers Beazley Acquisition to Boost EPS
Zurich Insurance Group could experience an increase in its earnings per share (EPS) if it decides to pursue an acquisition offer for Beazley, as projected by Berenberg's financial analysis. The investment firm estimates a 5.6% EPS boost at the proposed price of 1,280 pence per share, contingent on a 40% debt and cash funding structure, with the remaining portion financed through equity issuance. This projection does not include potential revenue or cost synergies, with Berenberg anticipating further EPS accretion staying above 4% at approximately 1,430 pence before tapering to 3.9% at 1,480 pence.
Zurich's robust financial infrastructure supports this prospective acquisition, with Berenberg highlighting the company's projected H1 2025 IFRS 17 leverage at 26% and a solvency ratio of 255% by December 2025, well exceeding its minimum target of 160%. A hypothetical scenario involving a $4 billion debt and $6 billion equity issuance could see leverage rise from 26.1% to 28.3%, balancing regulatory compliance requirements and risk management considerations.
From a credit standpoint, Moody’s reviewed the potential transaction's impact, viewing a Beazley acquisition as advantageous for Zurich. This move could enhance Zurich's specialty insurance capabilities and diversify its product lines, potentially amplifying specialty gross written premiums to $15 billion from $9.4 billion by 2024. Nonetheless, Moody’s identified certain risks, such as increased execution challenges and elevated debt levels, which might temporarily constrain available capital, given the acquisition's substantial cost of £7.7 billion.
Moody’s forecasts Zurich maintaining a Swiss Solvency Test (SST) capital ratio above 200% and financial leverage under 27%, in contrast to the current 21.5% predicted for 2024. The agency noted an SST ratio of 257% by September 2025, upheld by planned equity issuance and economic earnings that bolster capital sustainability, reinforcing Zurich’s position within payer and carrier landscapes.