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Swiss Re AG confirmed that its U.K.-based ReAssure Group Plc unit intends to undertake an initial public offering, giving the business firepower to expand its closed life and pension business.

The company is expected to begin trading in London in July, according to a statement from the Swiss parent company. ReAssure is likely to be valued at 3 billion to 3.5 billion pounds ($3.8 billion to $4.4 billion), Swiss Re Chief Financial Officer John Dacey said in February.

An IPO would allow ReAssure to grow through further consolidation of closed life and pension books in the U.K., Chief Executive Officer Mark Hodges said earlier this month. So-called closed-book policies are no longer sold, but still feature on an insurer’s books.

U.K. insurers manage 1.4 trillion pounds of assets tied to life policies, according to Hodges. Of that total, 390 billion pounds sits in closed books of business. Firms that specialize in closed business, such as ReAssure and its rival Phoenix Group Holdings Plc, say they can manage the assets more effectively than mainstream insurers that need to compete for new customers.

“Absolutely the ambition is to do deals, to consolidate,” Hodges said in a June 7 interview. “I’m ideally looking for books with mixed life and pensions in them.”

ReAssure will focus on the U.K. market, but could also seek to expand in Germany and the Netherlands, Hodges said. ReAssure has about 69 billion pounds of assets under management and employs about 2,500 people, he said.

In preparation for the IPO, ReAssure’s two shareholders -- Swiss Re and MS&AD Insurance Group Holdings Inc. -- will boost the unit’s capital by 481 million pounds, according to an earlier statement. Swiss Re would seek to reduce its stake to below 50% from 75% currently.

ReAssure has hired Credit Suisse Group AG as sole sponsor of the IPO, with Morgan Stanley and UBS Group AG as joint global coordinators and bookrunners. BNP Paribas SA and HSBC Holdings Plc are also joint bookrunners.

(Adds CEO’s comments starting in fourth paragraph.)

To contact the reporters on this story: Ross Larsen in Rome at rlarsen2@bloomberg.net;Will Hadfield in London at whadfield@bloomberg.net

To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Patrick Henry, Marion Dakers

©2019 Bloomberg L.P.

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