Barclays Plc, Britain’s third-largest bank, agreed to sell its UK life-insurance unit to Swiss Reinsurance Co for £753 million (US$1.5 billion) as it seeks to fund growth in faster-growing overseas markets.
“Swiss Re will acquire approximately 760,000 life-insurance and pension policies, as well as annuity contracts, representing approximately 6.8 billion pounds in invested assets,” Zurich-based Swiss Re said in a statement yesterday.
The purchase price values the unit at more than a 10 percent discount to its so-call embedded value, Swiss Re said in a slide presentation received by e-mail.
Barclays, which raised £4.5 billion in a share offering last month to help shore up capital, wants to increase consumer-banking earnings in Asia and lift securities trading and wealth management in the US. The asset sale will also help strengthen Barclays’ capital ratios, which have been eroded by US$6.4 billion in credit writedowns triggered by the collapse of the US subprime market.
“Barclays Life is an attractive, high quality business, which is not core to Barclays,” finance director Chris Lucas said in a separate e-mailed statement.
The division generated about £350 million in revenue in the year to November, Barclays said. It will make a £330 million net gain from the sale, which is due to be completed by Oct. 31.
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