Jackson National Life
Insurance, an indirect subsidiary of Prudential, has agreed to
purchase Swiss Re’s US life business SRLC for $621m.

SRLC is a life insurance
business that sits within the US division of Swiss Re’s Admin Re.
The primary operating subsidiary of SRLC is Reassure America Life
Insurance Company (REALIC)

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The sale is expected to
close in Q3 2012, will be funded entirely through Jackson’s
internal resources. Swiss Re will retain a portion of the SRLC
business through reinsurance arrangements to be undertaken prior to
closing.

Jackson said the deal
will diversify its earnings base by increasing the percentage of
income derived from underwriting activities relative to the
company’s current spread- and fee-based businesses.

Scale

Jackson CEO 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. It
is a capital efficient transaction that will produce an attractive
IRR (internal rate of return) and payback period commensurate with
what we achieve organically on writing new business.

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He added that the
acquisition will also help diversify Jackson’s earnings by
increasing the amount of income it generates from underwriting
activities.  

Swiss Re expects the
transaction to result in a dividend of $900m in cash thereby
unlocking capital that can be re-deployed across the group. The
group say that the sale is part of a re-focusing on the UK and
European life markets, which promise higher
profitability.

Michel M. Liès, Swiss Re
Group Chief Executive, said: “Redeploying the funds freed up
through this transaction within the Swiss Re Group will have a
beneficial impact on all three of our financial targets in the
future, that is to say return on equity, earnings per share and
economic net worth growth.”