Swiss Re to buy Guardian Financial Services for £1.6 billion

Swiss Re subsidiary Admin Re has agreed to purchase UK’s life insurance consolidation business, Guardian Holdings Europe, from private equity firm Cinven, for around £1.6bn.

Guardian, based in Lytham St Annes, in Lancashire, and Admin Re both buy and consolidate blocks of existing life and pension insurance policies.

Admin Re said the additional policies would bring economies of scale and the company aimed to provide the same quality of service as it does to its current 3.4 million customers.

“It is proof that we can deliver on our ambitions to seek profitable growth opportunities for Admin Re in the United Kingdom “, he said.

Swiss Re Chief Executive Officer Michel Liès said the deal is an “excellent fit” and will allow Admin Re to diversify its portfolio and expand its business. We will continue to remain well capitalised and our economic solvency ratio will remain comfortably above our risk tolerance.

Swiss Re said the Guardian purchase is an opportunity to deploy part of its excess capital, which is prompting mergers across the industry.

“They might go quiet for a while now because they have done a number of deals”.

“This is a large size deal for them”, Ming Zhu, an analyst at Canaccord Genuity. It is however expected to generate a positive contribution to EVM economic net worth over time, supporting Swiss Re’s focus on long-term value generation.

“This acquisition is in line with Admin Re’s strategic goals as well as with our multi-year financial planning”, Swiss Re’s Chief Financial Officer David Cole said in the statement. In addition, the assets under management of the Swiss Re Group would increase by 12.5 billion pounds, or about 15 percent.

The Guardian deal is expected to complete in early 2016.

Cinven bought Guardian from Dutch insurer Aegon NV for 275 million pounds in 2011 and made three acquisitions of closed insurance businesses since then.

Swiss Re shares were settled at 82.35 Swiss francs on Tuesday.