MS&AD Insurance Group is acquiring 5% of the outstanding shares of
Swiss Re’s ReAssure Jersey One Limited (ReAssure), and over time will subscribe new shares to increase the Japanese firm’s stake up to 15%.
The initial 5% share acquisition is worth £175 million, with MS&AD committing to invest – within a three-year period from closing – as much as £800 million (AU$1.347 billion) into ReAssure’s equity. ReAssure is a UK closed life book consolidator within the Swiss Re Life Capital business unit.
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“The commitment to invest the additional £625 million will be satisfied through the issuance of primary equity to MS&AD (based on the same valuation formula) as ReAssure undertakes transactions in the future,” explained parent Swiss Re. “Once the 15% shareholding threshold is reached, both Swiss Re and MS&AD will subscribe to any further equity injection into ReAssure on a pro rata basis.”
The Japanese insurer said it considers it an attractive opportunity to participate in the consolidation dynamics of the UK closed life market. “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,” it noted.
“This is a positive step and gives us greater capacity for future deals,” commented ReAssure chief executive Matt Cuhls. “The UK closed book market is expected to offer significant consolidation opportunities in the near future.”
Life Capital chief executive Thierry Léger, on the other hand, said: “I am delighted that we partner with a like-minded, long-term investor that will invest with us side-by-side.” He added that the closed book business is a core component of Swiss Re’s overall strategy.
The initial acquisition, subject to regulatory approval, is expected to close in the first quarter of 2018. Swiss Re said no further regulatory approvals are expected to be required for the additional MS&AD investments.
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