Major international reinsurer Swiss Re has agreed to spin off its investment banking division Fox-Pitt, Kelton (FPK) to a consortium of management and private equity firm JC Flowers & Co.

FPK is a boutique investment bank that focuses on providing corporate finance and M&A advice to financial services companies. Swiss Re has owned the investment outfit for the last six years of its 34 year history.

The buyout will see FPK’s existing staff and JC Flowers & Co. take a majority share of the new independent business, while Swiss Re and other new investors, such as Lazard vice-chairman Gary Parr, will hold minority stakes.

The purchase is expected to close during the first half of 2006 and in addition to the transfer of the FPK group of companies, it is expected that employees working under the FPK brand plus a number of additional staff from Swiss Re’s Capital Management and Advisory team will become part of the new organization.

We’re pleased with the new ownership for Fox-Pitt, Kelton, commented Swiss Re chief executive Jacques Aigrain. FPK has been instrumental in helping Swiss Re to build our capital markets capabilities. However, we believe this move better positions FPK for the future. With Swiss Re maintaining a stake in the new company, we can participate in its future success.