NU Online News Service, May 31, 10:24 p.m. EDT
Swiss Re has sold its U.S. Admin Re business to Jackson National Life Insurance for a cash payment of $600 million.
The transaction, which is expected to close in the second half of the year, involves Swiss Re's U.S. Admin Re holding company, Reassure America Life Insurance Company. The sale remains subject to regulatory approvals, the Zurich, Switzerland-based insurance company says.
Swiss Re adds that it will retain certain blocks of business.
In a separate statement, Prudential plc, the British insurer and parent company of Jackson National, says the insurer will pay $621 million for the business and the transaction will be completed during the third quarter of 2012.
Swiss Re Executive Committee Member and Chairman of Admin Re David Blumer says in a statement, "After conducting a thorough review of the Admin Re portfolio and evaluating the level of capital allocated to the Admin Re U.S. business, we concluded that we should redeploy the capital in other parts of our business."
Swiss Re says the transaction is expected to result in a dividend of $900 million in cash to Swiss Re Ltd, allowing it to unlock capital for re-deployment across the Swiss Re Group.
The divestiture further demonstrates management's commitment to a key element of Admin Re's strategy, which is to focus on consistent and systematic management of the portfolio of blocks of business and value extraction. This is aligned with Swiss Re's Group strategy.
Swiss Re Group Chief Executive Michel M. Liès says, "We consistently said the group's 2011-2015 financial targets are our top priority. Redeploying the funds freed up through this transaction within the Swiss Re Group will have a beneficial impact on all three of our financial targets in the future, that is to say return on equity, earnings per share and economic net worth growth."
Swiss Re went on to say that it sees attractive growth potential in the United Kingdom and Continental Europe. Consequently, Admin Re will focus on these active areas with insurance deal-flow as well as higher profitability, Swiss Re says.
Standard & Poor's issued a statement affirming the "double-A" financial strength rating of Jackson National and placed Reassure America Life on credit watch with developing implications.
Late this afternoon, Moody's issued a statement affirming the "A1″ ratings of Jackson National and Reassure America. The outlook for Reassure America was changed to stable from positive.
This story was updated at 3:35 p.m. EDT with statements from Prudential plc. and Standard & Poor's and updated at 4:18 p.m. EDT with statements from Moody's.
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