The Swiss firm, which is headquartered in Zurich, said its Admin Re division will buy Guardian to bolster its position in Britain as a consolidator of life funds that are closed to new business.
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Closing of the acquisition, which is subject to regulatory approval, could be completed in early 2016 and would be financed from cash on the balance sheet as well as debt financing.
The latest takeover comes amid a spate of consolidation in the life and pensions sector as it grapples with major changes following reforms announced by Chancellor George Osborne in last year’s Budget.
Image: Swiss Re subsidiary Admin Re to acquire Guardian Financial Services.
According to Swiss Re, the expected returns exceed its profitability targets for new business and represent an excellent fit with its strategy as well as with Admin Re’s capabilities and existing infrastructure.
“This acquisition is in line with Admin Re’s strategic goals as well as with our multi-year financial planning”, Swiss Re’s Chief Financial Officer David Cole said in the statement. The deal won’t affect the Zurich-based company’s share buyback programme, he said. Accordingly, it does not alter the view of the share buy-back programme, which was authorised by shareholders at the 2015 Annual General Meeting, the company said. After the purchase, Admin Re will have more than four million policies in the United Kingdom .
“This is a large size deal for them”, Ming Zhu, an analyst at Canaccord Genuity. Swiss Re’s assets under management will increase by 12.5 billion pounds or about 15 percent. Guardian now has around £20bn of assets under management.
Deals in the insurance sector have proliferated this year, triggered by record levels of surplus capital and pressure on property and casualty reinsurance pricing.
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The acquisition is an attractive opportunity for Swiss Re to deploy part of its excess capital above the Group’s hurdle rate of 11% ROE.
