(Bloomberg) — Swiss Re Ltd., the world's second-biggestreinsurer, agreed to buy a Chinese unit of the U.K.'s RSA InsuranceGroup Plc as it shifts capital to regions with higher premiumgrowth prospects.

The company, based in Zurich, is buying Sun Alliance Insurance(China) Ltd. for 71 million pounds ($122 million), according to astatement today. The acquisition, which is subject to regulatoryapproval, will enable Swiss Re to offer corporate insurancedirectly from mainland China.

Swiss Re is expanding in faster-growing markets such as China,Indonesia and Brazil to increase the portion of premiums from thoseregions to between 20% to 25% by 2015 from 18% last year, itsaid.

The company last year bought a stake in New China Life InsuranceCo. for about $493 million, and a holding in Brazilian insurer SulAmerica SA for $334 million. In October, it invested as much as$425 million in Hong Kong billionaire Richard Li's FWD Group.

“Growing wealth and increasing urbanization are key drivers fora continuing demand” for insurance and reinsurance products in“high growth markets,” Swiss Re said in the statement. “With theoverall outlook for these markets remaining intact, the growth ratefor premiums is expected to stay at around 8% per year.”

That's more than double the 3% premium growth rate foreseen inmature markets from 2013 to 2020, according to a presentation onthe company's website.

Shares Rise

Swiss Re rose 0.2% to 79.95 Swiss francs at 10:43 a.m. in Zurichtrading, trimming losses this year to 2.6%. RSA climbed 0.1% to474.6 pence in London. The stock has climbed 17% this year afterdropping 27% in 2013.

Swiss Re said it's “confident” it will reach a return-on-equitygoal of 10% to 12% by 2015. It plans to invest $3 billion of excesscapital by next year to grow its business and “a good bit” could bespent in high growth markets, Chief Financial Officer David Coletold reporters on a conference call.

“That doesn't mean we are going to turn down opportunities indeveloped markets,” Cole said. Swiss Re will look at ways to returnmoney to shareholders if it can't invest the capital at areturn-on-equity of 11%, he said.

RSA Strategy

RSA, which also owns businesses in Hong Kong, Singapore andIndia, is selling non-core assets to bolster capital after threeprofit warnings in the fourth quarter and an accounting scandal inIreland. It sold a Canadian insurance broker to Arthur J. Gallagher& Co. in May and disposed of its eastern European units to PZUSA in April.

“We are continuing to evaluate further non-core disposals, someof which we expect to agree during 2014,” Chief Executive OfficerStephen Hester said in a statement.

The British insurer is looking to raise at least 300 millionpounds from asset sales outside of its “core markets” of the U.K.,Ireland, Canada, Scandinavia and Latin America in 2014, it said inFebruary.

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.