Zurich Insurance announced on Monday that it will release around $1.2 billion in capital by selling its Italian life and pensions back book to Portuguese insurer GamaLife.

Zurich further stated that the transaction will increase its Swiss Solvency Test ratio by 11 percentage points and considerably lower its credit risk exposure.

The transaction is projected to enhance Zurich’s liquidity by roughly $200 million, with a cash consideration of about $148 million.

A back book is a collection of previous policies that are still in force as premium-paying policies.

“The sale underscores our commitment to improving capital use throughout our life backbook,” said Zurich finance head George Quinn.

“The purchase also decreases our exposure to interest rate and credit risks, allowing us to focus on the segments of the Italian life and pensions market where we can best serve our clients.”

The transaction has no effect on Zurich’s contractual responsibilities to policyholders and distributors, according to the company, which will remain engaged in the Italian life insurance and pension market.

Last year, the Swiss firm agreed to purchase Deutsche Bank’s financial advisor network in Italy.