Credit Suisse to Buy Insurer for $9 Billion

The Credit Suisse banking group said Monday that it will buy Winterthur, Switzerland’s second-biggest insurance company, for about $9 billion in stock.

The deal would push the group into the top 10 global providers of banking and insurance services, with a client base of 15 million individuals and institutions.

The planned merger, which needs approval from shareholders and regulators, would make CS Group the biggest Swiss bank and the world’s third-largest asset manager for private and institutional investors, with $465 billion under management. U.S.-based Fidelity Investments leads, with client funds of $520 billion.

Lukas Muehlemann, CS Group chief executive, also told a news conference the new group would be one of the world’s 10 biggest financial services companies, with a stock market capitalization of about $37 billion.

“The merger is a powerful, forward-looking response to developments in the financial services market,” said Muehlemann, who would also be chief executive of the combined group.

Many had been expecting the deal since Union Bank of Switzerland rejected Credit Suisse’s advances. Credit Suisse already had close links with Winterthur, which would keep its own name under the deal.

The merger illustrates the blurring lines between banks and insurance companies as competition heats up to offer customers one source for a wide range of financial services, often dubbed “bancassurance.”

Speculation about the future of Winterthur peaked over the weekend when Martin Ebner, one of Switzerland’s most prominent shareholders, said he planned to take over the insurance firm. As an alternative, he held out the option of a Credit Suisse takeover.

Ebner’s group welcomed Monday’s news as a “sensible industry solution at a very fair price.” However, it did not unequivocally say it would vote for the deal.

Credit Suisse said the deal will result in gains of $200 million to $233 million over three years.