(Bloomberg) — Zurich Insurance Group AG abandoned a 5.6 billion-pound ($8.7 billion) offer for RSA Insurance Group Plc as the Swiss company grapples with a surge in claims that will lead to a quarterly loss at its biggest unit.
The biggest Swiss insurer expects a loss of $200 million at its general insurance unit in the third quarter, the company said in a statement Monday. RSA dropped 20 percent, reducing its market value by more than 1 billion pounds, while Zurich shares fell 1.3 percent as of 1:44 p.m. in Zurich.
The dropped bid puts the focus back on the $3 billion in excess capital Zurich had planned to use to acquire RSA. The insurer on Monday reiterated that it intends to either distribute the money to shareholders or acquire another company. Difficulties at the general insurance unit may hamper the company's efforts to meet profit targets set for the end of next year.
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