MS&AD Insurance Group has agreed to acquire an additional stake of 10% in ReAssure, the UK closed life book consolidator of Swiss Re, for £315m.
The latest investment to be made by the Japanese insurance group increases its stake in ReAssure from 15% to 25%.
Swiss Re revealed that the transaction value is based on the £3.5bn valuation of the UK closed life book business as agreed with MS&AD in October 2017.
The reinsurance giant said that the new investment from the Japanese firm shows its appreciation of ReAssure’s strong franchise.
ReAssure, which is a life and pensions business, acquired 1.1 million life insurance policies from Legal & General Group (L&G) in December 2017. This was through Swiss Re’s acquisition of L&G’s mature savings business for £650m.
Prior to that in October 2017, MS&AD made a deal to acquire an initial 5% stake in ReAssure for £175m as part of its £800m investment for acquiring 15% stake in the UK closed life book business.
ReAssure claims to have more than 2.3 million policies in its books. The company also handles investments of more than £44 billion for its customers.
It provides companies looking to exit from closed books of business the scope to do so, in addition to serving its acquired policyholders.
Swiss Re Life Capital CEO Thierry Léger said: “As we continue to work towards the potential IPO of ReAssure in 2019, the increase of MS&AD’s stake to 25% is a strong vote of confidence from our minority shareholder and long-term partner.
“We are delighted to have them as investors alongside us and together we remain committed to supporting ReAssure in its strategy of leading the way in UK life and pensions consolidation.”
Earlier this week, Swiss Re announced that Mark Hodges will be the new CEO of ReAssure from 1 March 2019. Hodges, who is currently CEO of Centrica Consumer division, will help the business towards the IPO in 2019 and also lead its next phase of expansion as an independent listed closed book consolidator.