UPDATE 1-Zurich to take $300 million hit from selling Russian retail unit

Thu Jul 3, 2014 5:38am EDT

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ZURICH, July 3 (Reuters) - Zurich Insurance Group AG 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 programme 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 last 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 under-performing," Mike Kerner, chief executive of Zurich's General Insurance unit said in a statement on 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.

Shares in Zurich were trading nearly 1 percent higher by 0915 GMT, slightly outperforming the European sector index .

($1 = 34.2300 Russian Roubles) (Reporting by Alice Baghdjian and Paul Arnold, writing by Caroline Copley; Editing by Prateek Chatterjee and Pravin Char)