ReAssure, the closed life book consolidator specialist unit of global reinsurance firm Swiss Re, has agreed an acquisition of a UK £425 million UK closed life insurance business from Quilter plc.
The acquisition will add 200,000 customer policies and UK £12 billion of assets to ReAssure’s platform and demonstrates Swiss Re’s continued commitment to this business, that it ideally wants to shed through an initial public offering (IPO).
Swiss Re said this morning that the deal grows ReAssure’s total policy count to 4.5 million, while the assets under its administration now reach UK £81 billion.
The UK closed life insurance business of Quilter plc (known as Quilter Life Assurance) consists of Old Mutual Wealth Life Assurance Limited and subsidiary Old Mutual Wealth Pensions Trustees Limited, as well as around 300 employees.
The purchase involves what Quilter terms a “substantially closed book of unit-linked policies,” made up of pensions, investment and savings, and protection products with both Retail and Institutional offerings.
The deal is to be funded from ReAssure’s own cash resources and is expected to be completed for the end of this year, subject to regulatory approval.
A UK £395 million cash payment will be made at completion of the acquisition, while a pre-completion dividend of UK £30 million will provide the rest, subject to Board approval by Quilter. Should the Quilter Board not approve the dividend payment then Swiss Re will pay the full UK £425 million to complete the deal.
The company believes the transaction will deliver it “substantial synergies and increase future cash generation potential.”
Thierry Léger, CEO of Swiss Re’s Life Capital Business Unit, commented on the news, “This acquisition continues ReAssure’s success in capturing attractive opportunities in a rich pipeline of potential transactions and demonstrates the strength of its business model and management team. We remain fully supportive of ReAssure as the company continues to pursue its growth strategy and build its cash generating capacity.”
Paul Feeney, Chief Executive Officer of Quilter, added, “I am delighted we have agreed to sell Quilter Life Assurance to ReAssure. ReAssure is a highly regarded manager of closed book assets and has the experience to deliver continued high quality investment and administration services to clients of Quilter Life Assurance. The Quilter Board is currently minded to return a meaningful proportion of the net surplus proceeds arising from the transaction to shareholders and will consult with them on the most appropriate means of undertaking this.”
Swiss Re has been actively trying to IPO the ReAssure unit, which even its own CEO has said does not fit so well into its overall business model and structure.
Recently Swiss Re suspended an attempt to IPO ReAssure, saying that there wasn’t sufficient demand. But the reinsurer intends to persist and expects to return to the IPO market with ReAssure in future.
The last time ReAssure announced an acquisition was back in December 2017, when the company acquired 1.1 million life insurance policies from Legal & General in a deal worth UK £650 million.