Swiss Re to buy US operation for SFr3.36 billion
The Swiss Reinsurance Company, Swiss Re, has announced a major acquisition. It is set to buy the reinsurance operation of the Lincoln National Corporation in the United States for $2 billion (SFr3.36 billion).
Swiss Re said on Monday it would integrate Lincoln Re, based in Fort Wayne, Indiana, into the Swiss Re North American Life and Health unit, strengthening its position as the leader in the world’s largest life and health reinsurance market.
Swiss Re is one of the world’s leading reinsurers with over 70 offices in more than 30 countries.
In a statement from Swiss Re headquarters in Zurich, the company’s chairman and chief executive officer, Walter Kielholz, said that Lincoln Re was “an excellent strategic fit” with Swiss Re’s plans to expand life and health reinsurance globally.
“As a world leader in managing capital and risk, Swiss Re is well suited to build on the success of Lincoln’s reinsurance business to better serve our combined clients across the globe,” Kielholz said.
The chairman and chief executive officer of the Lincoln National corporation, Jon A. Boscia, said that the divestiture of Lincoln Re was a logical step in the company’s evolution from a multi-line insurer to a financial services company.
“Going forward, Lincoln will use its capital to implement an aggressive, yet disciplined, acquisition strategy and to continue its expanded stock buyback programme,” he said.
In addition to the purchase price, Lincoln will retain $500 million of capital currently supporting the business. Swiss Re will enjoy tax benefits which will offset the additional capital required. The transaction is expected to close in the fourth quarter.
Swiss Re said it intends to raise equity to finance the transaction. Details of that will be disclosed on September 7 when the company publishes its half-year results.
In the 2000 financial year, Swiss Re’s gross premium volume totalled SFr26.1 billion and the net income after tax reached SFr3 billion.
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