Swiss Re acquires Barclays Life

by Gill Montia

Story link: Swiss Re acquires Barclays Life

Swiss Re, the world’s largest reinsurer, has agreed to buy Barclays Life, for £753 million.

The unit, which is being sold by Barclays bank, closed to new business in 2001 and generated premium income of £350 million in 2007.

The business holds around £6.8 billion in invested assets, covering 760,000 life insurance and pension policies and annuity contracts. It will be integrated into Swiss Re’s Admin Re unit.

Barclays estimates that the sale will provide a post-tax gain of around £330 million.

According to Swiss Re chief executive, Jacques Aigrain, the acquisition shows that the group has the capability to take advantage of today’s tough markets.

He is confident that Swiss Re remains strongly capitalised and that its investment portfolio is sound.

However, the group posted a 53% drop in profit in the second quarter of 2008, to 564 million Swiss francs (£274 million), in a result that was below analysts’ expectations.

A loss of 362 million Swiss francs (£176 million) pertained to structured credit default swaps.

The group, which as already been hard-hit by the credit crisis, estimated losses of 350 million Swiss francs in CDS writedowns for the second quarter.