Jumat, 01 Juni 2012

Prudential spends £400m on American life assurer

Prudential spends £400m on American life assurer

By James Salmon

PUBLISHED: 16:51 EST, 31 May 2012 | UPDATED: 16:52 EST, 31 May 2012

Acquisition: Prudential

Acquisition: Prudential

Prudential has signalled its commitment to the US by snapping up Swiss Re’s American life assurance business for £398m.

The insurer will acquire £6.7bn of assets and around 1.5m life insurance policies after purchasing SRLC America Holding Corp â€" which represents the bulk of Swiss Re’s US subsidiary Admin Re.

The Pru’ said it would add £100m to its earnings in the first year and broaden the business mix for US arm Jackson.

This is currently focused on a breed of pensions annuities which provide variable income linked to the stock market.

Analysts welcomed the deal, with Oriel Securities branding it ‘extremely attractive’ and ‘very financially enhancing’.

Eamonn Flanagan from Shore Capital said: ‘The pr ice paid, £398m in cash, represents 46 per cent of the embedded value of £865m â€" a smart deal in our view.’

The UK insurer (up 5p to 678p) has previously issued thinly-veiled threats that it may have to sell off its US business or move its domicile overseas.

It is concerned by new EU rules, dubbed ‘Solvency II’, which could require it to hold more spare capital across its global operations, including the US.

It is concerned that this would force it to offer worse deals to customers than domestic US competitors, leaving it unable to sell any products.

Jackson Life chief executive Mike Wells said: ‘This bolt-on acquisition is in line with our strategy and is a great opportunity to increase the scale of our life business.’

The deal does not appear quite so profitable for Swiss Re. It will book a £558m charge against its profits after selling the subsidiary for less than it is listed on its accounts.

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