Swiss Re has joined the deal frenzy gripping the insurance industry with a £1.6bn deal for a UK insurer, just days after Zurich’s bid for RSA collapsed.
The world’s second biggest reinsurer – whose London base is the famous Gherkin tower – said its business division, Admin Re, would pay £1.6bn for Guardian Financial Services.
Guardian is owned by the private equity company Cinven, and the takeover will add 900,000 annuity, life insurance and pension policies to Admin Re’s existing UK business of more than four million policies. There has been a spate of deals in the insurance sector this year, triggered by record levels of surplus capital thanks to relatively low levels of disaster claims and pressure on property and casualty reinsurance pricing.
British firms have been at the heart of the consolidation since Aviva bought Friends Life in a £5.2bn deal in April this year.
Last week, Japan’s Mitsui Sumitomo said it was taking over Amlin in a £3.5bn deal. Just Retirement and Partnership Assurance – also part-owned by Cinven – unveiled merger plans in the summer.
Problems uncovered in Zurich’s general insurance division scuppered its £5.6bn RSA bid this week.
Guardian and Admin Re both buy and consolidate blocks of existing life and pension insurance policies. The takeover will increase assets under management at the Swiss group by 15 per cent.
As recently as a few days ago there was speculation that Guardian was talking with its UK rival Phoenix Life about a tie-up. But sources said Swiss Re was prepared to come in and pay a higher price.
The deal will require EU approval but could be completed in early 2016.
