Japanese insurance group MS&AD Insurance Group Holdings (MS&AD) has agreed to increase its minority stake in ReAssure, Swiss Re’s UK closed life book consolidator, by making an additional cash investment of £315 million ($398.7 million).
The transaction, which is subject to regulatory approvals, follows the MS&AD’s 15 percent investment in ReAssure, which was completed in February 2018 and brings MS&AD’s shareholding to 25 percent.
The transaction value is based on the £3.5 billion ($4.4 billion) valuation of ReAssure agreed between the two parties in October 2017 adjusted for subsequent dividends and capital injections made into ReAssure in connection with ReAssure’s acquisition of 1.1 million life policies from Legal & General, which was announced in December 2017.
“[The] investment demonstrates MS&AD’s appreciation of ReAssure’s strong franchise, built on the cooperation and mutual trust that has existed between MS&AD and Swiss Re for over 100 years on the back of their long-standing business relationship,” Swiss Re said in a statement.
Thierry Léger, CEO Swiss Re Life Capital, commented: “As we continue to work towards the potential IPO of ReAssure in 2019, the increase of MS&AD’s stake to 25% is a strong vote of confidence from our minority shareholder and long-term partner. We are delighted to have them as investors alongside us and together we remain committed to supporting ReAssure in its strategy of leading the way in UK life and pensions consolidation.”
In a statement, MS&AD said: “The UK is the largest and most mature life insurance market in Europe with the closed book life business as a promising area, providing ample growth potential for ReAssure.”
The transaction is expected to close during the fourth quarter of MS&AD’s financial year 2018 (January-March. 2019), MS&AD said.
Further to an announcement made on Aug. 3, 2018, Swiss Re is exploring a potential IPO of ReAssure during 2019, subject to market conditions, in a move designed to increase its competitiveness.
Source: Swiss Re/MS&AD
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