Swiss Re expects to raise $3.9 billion instead of $4.7 billion in equity securities to fund its acquisition of GE Insurance Solutions, the Zurich-based company said today.
In place of the $800 million in planned equity, Swiss Re will use internally-generated cash. The expected total cost for the acquisition remains unchanged at $7.6 billion.
Swiss Re and General Electric have agreed that the portion of the purchase price payable in Swiss Re shares is to be reduced to $2.4 billion.
In addition, $500 million of mandatory convertible instruments are expected to be issued to GE, resulting in total ownership in Swiss Re by GE of less than 10 percent.
Swiss Re said it also expects to undertake a rights offering of $1 billion equivalent to existing shareholders at market on a 1-for-17 basis (one new share for each 17 existing shares). Shares not taken up will subsequently be available in a global offering.
The acquisition of GE announced last November will turn Swiss Re into the largest writer of reinsurance premiums in the world.
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