THE Swiss insurance company Zurich Financial Services is working on a plan to package up and sell part of its UK life insurance business to release up to £1 billion.

The insurer is understood to have called in Lehman Brothers, the investment bank, to advise on the securitisation scheme, which it aims to complete in the fourth quarter of this year.

The plan would allow Zurich to use the capital to focus on writing more profitable areas of business. Zurich, led by James Schiro, has been restruc-turing its British operations.

Earlier this year it transferred a £3.9 billion book of annuities business to Swiss Re, releasing about £300m.

The deal came after Zurich decided to scale back in annuities in 2005 to concentrate on higher-margin pensions, investments and protection products.

Zurich has been tipped as a bidder for Friends Provident, which last month agreed to an £8.3 billion merger with Resolution, the FTSE 100 group that has grown rapidly by buying up life insurance funds that no longer write new policies.

Last week France’s Axa, which has been seen as another bidder for Friends, appeared to distance itself from an offer. Zurich has refused to comment so far.

Bankers believe the securitisation deal is likely to be part of a strategy to drive expansion in selected British markets.

Though Britain is Zurich’s biggest market after Germany for life and pensions sales, it is seen as a sub-scale player. It is outside the top 10 life insurers and has only 3% of the market. Last year it wrote life and pensions business of £1.1 billion, similar to Friends Provident.

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