Pru in £400m swoop for Swiss Re’s US arm

By MARTIN FLANAGAN
Published on 01/06/2012 00:00

INSURANCE major Prudential swooped to extend its footprint in the United States yesterday with the $621 million (£398m) acquisition of SRLC America Holding Corporation, the US life insurance business of Swiss Re.

The Pru is making the purchase through its American subsidiary Jackson National Life Insurance. Under the deal, the British insurer will acquire £6.7 billion of assets and about 1.5 million policies, adding £100m to its bottom line in its first year of ownership.

Mike Wells, chief executive of Jackson National Life, said: “This bolt-on acquisition is in line with our strategy and is a great opportunity to increase the scale of our life business. It helps diversify Jackson’s earnings by increasing the amount of income we generate from underwriting activities, thereby enhancing the quality of our earnings and our ability to remit more cash to the group.”

Swiss Re is set to take a $860m charge against its second-quarter profits on the disposal because the SRLC business’s book value is higher than the sale price.

The acquisition comes against the backdrop of the Pru raising the possibility of moving its London domicile abroad if the European Union pushes through exceptionally tough capital rules for the American subsidiaries of European insurers.

The Pru’s shares closed up 5p at 678p.