Swiss Re to Acquire Barclay’s Run-off Life Business for $1.47 Billion

Swiss Re has agreed to acquire Barclays Life Assurance Company Ltd. for £753 million ($1.472 billion). “The transaction will provide further scale and infrastructure for Swiss Re’s Admin Re® business in the United Kingdom and underlines Swiss Re’s role as a leading player in the origination, transfer and trading of insurable risks,” said the bulletin.

Swiss Re said it would acquire approximately 760,000 life insurance and pension policies and annuity contracts, representing approximately £6.8 billion [$13.3 billion] in invested assets. The Barclays Life book comprises unit-linked life and pension policies with a smaller block of protection business, including term life and permanent health insurance. Admin Re® is a service provided by Swiss Re involving the acquisition of closed books of life and health policies that have been placed into run-off – with Swiss Re assuming responsibility for policy administration.

Barclays Life, a unit of Barclay’s Bank, has been closed to new business since 2001. However, Swiss Re noted that the “closed business still generates annual premium income of approximately £350 million [$684.5 million] from contributions to existing policies.”

The deal is expected to be completed by the end of October 2008, subject to regulatory approvals. 23 people dedicated to Barclays Life will transfer to Swiss Re upon completion.

“The transaction is accretive to economic and US GAAP earnings and is expected to achieve an ROE in excess of Swiss Re’s over-the-cycle target of 14 percent,” said Swiss Re. The reinsurer added that it would fund the purchase from “internal resources and external funding already in place.”

The bulletin also noted that the transaction will have “no effect on Swiss Re’s previously announced share buy-back program – the buy-back of CHF 7.75 billion [$7.36 billion] worth of shares is expected to be completed as scheduled by April 2010.”

Swiss Re’s CEO Jacques Aigrain commented: “Swiss Re’s execution capability and capital strength, combined with our experience in managing UK life portfolios, have enabled us to acquire Barclays Life at a value-creating price. This acquisition underlines Swiss Re’s role as a leading player in the origination, transfer and trading of insurable risks.”

Source: Swiss Re - www.swissre.com