MS&AD Insurance Group Holdings of Japan has agreed to acquire an initial 5% stake in ReAssure, a UK closed life book consolidator of Swiss Re Life Capital, for £175m as part of its £800m investment for acquiring 15% shareholding in ReAssure.
Under an agreement reached with SwissRe, MS&AD will invest £800m in ReAssure over a three-year period.
The acquisition of initial 5% stake is subject to regulatory approval and this transaction is expected to close in the first quarter of 2018.
The additional £625m will be mobilized through the issuance of primary equity to MS&AD.
On reaching the 15% shareholding, Swiss Re and MS&AD will consider further investment in ReAssure on a pro rata basis.
After the transaction, ReAssure will continue to be a core part of Swiss Re’s business. The transaction will not have any impact on ReAssure’s strategy and employees.
Swiss Re earlier announced that it will provide greater financial flexibility to ReAssure to support its future growth. The investment by MS&AD is part of this strategy.
Life Capital chief executive officer Thierry Léger said: “I am delighted that we partner with a like-minded, long-term investor that will invest with us side-by-side.
“The closed book business is a core component of Swiss Re’s overall strategy. Swiss Re remains committed to supporting ReAssure with their strong team, great platform and excellent growth prospects.”
ReAssure CEO Matt Cuhls said: “This is a positive step and gives us greater capacity for future deals. The UK closed book market is expected to offer significant consolidation opportunities in the near future.”
“Thanks to this commitment from MS&AD and given our proven acquisition and integration capabilities, we are well-positioned to seize these opportunities while delivering attractive returns,” Cuhls added.