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Swiss Re to buy Guardian Financial Services for $2.45B

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September 25
12:57 AM 2015

Switzerland reinsurer Swiss Re AG has decided to acquire the UK-based Guardian Financial Services from private equity (PE) firm Cinven for GBP 1.6 billion ($2.45bn). The acquisition will help in strengthening the British business of the unit.

The latest development in the reinsurers' segment is expected to add to the growth amid weakening prices. Admin Re, a unit of Swiss Re, will buy Guardian Financial Services and complete the process by early 2016. The deal is projected to give Admin Re 900,000 annuity and over four million policies in the UK. 

Admin Re is optimistic of future returns as they are surpassing its targets for new business. The acquisition, as Admin Re says, is an ideal business proposition for its capabilities and infrastructure. 

Admin Re forecasts that it'll generate $1.7bn gross cash including capital synergies in next three years. Assets under management of Swiss Re are expected to swell by GBP 12.5bn or 15 percent during the period.

Swiss Re's Admin Re is engaged in closed book policies that are no longer being sold to new customers, but continue to draw premium payments. The latest acquisition proposal is being done in a reversal situation. Earlier, Swiss Re had a proposal to offload Admin re. 

However, the negotiations between Swiss Re and UK-based Phoenix Group Holdings were not successful in 2013. Phoenix Group Holdings is British largest owner of life insurance funds and is not accepting new customers.  

With the acquisition adding to Admin Re is expected to bring in 900,000 annuity, life insurance and pension policies in the UK including Ireland. This will take UK business of Admin Re to over four million policies.

Swiss Re Chief Executive Michel M Lies said in a press release that the acquisition deal would be an excellent opportunity for Admin Re to enlarge its business and diversify portfolios. 

"The expected returns will exceed our targets and a n excellent fit with our group strategy as well as with Admin Re's capabilities and existing infrastructure. It's proof that we can deliver on our ambitions to seek profitable growth opportunities for Admin Re in the UK," said Lies.

Reinsuring activity helps insurance companies to withstand major damage claims that might happen due to earthquakes, hurricanes, or any other natural calamity. British unit buys and manages the closed life insurance policies. 

Guardian Financial Services wouldn't write new policies, but it acquires blocks of existing insurance policies from banks and insurers, who want to sell non-core assets or provide insurance against possible losses.

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