Barclays sells life insurance arm to Swiss Re
Barclays has improved its balance sheet today after it revealed it has offloaded its life insurance unit to Swiss Re in a deal worth £753 million ($1.48 billion), subject to regulatory approval.
Swiss Re is paying £753 million in cash for Barclays Life, which manages £6.8 billion of assets on behalf of 760,000 policyholders.
Swiss Re, which is the world’s biggest reinsurance firm, hopes the purchase will improve its Admin Re business in the UK.
The news follows a 53% fall in second quarter profits for Swiss Re to £274 million.
Barclays Life consists of the life assurance operations of Barclays and Woolwich, but closed to new business in 2001.
Commenting on the deal, Chris Lusas, Barclays’ finance director, said he is delighted with the sale.
Meanwhile, Jacques Aigrain, Swiss Re’s chief executive, said the turmoil in the financial market continues but this challenging environment also presents opportunities and we are strongly capitalised and our investment portfolio remains strong.
It is expected that Barclays will make a £330 million post-tax profit following the sale. As with other banks, Barclays has been hit by the credit crunch, but it is under more pressure to raise extra funds to shore up its balance sheet.
Barclays, which is Britain’s third largest bank, recently secured £4.5 billion from investors but from ordinary shareholders only took 19% of new shares.
Barclays is due to announce results this week, with a 35% fall in profits expected.