6 Aug 2008

Swiss Re buys Barclays life unit

11:58 am on 6 August 2008

Barclays is to sell its life assurance arm to Swiss Re for £753 million in cash.

Swiss Re, which hopes to boost its Admin Re business in the UK, will acquire 760,000 life insurance and pension policies and annuity contracts. Those policies represent about £6.8 billion in invested assets.

The move comes as Swiss Re, the world's largest reinsurance firm, reported a 53% drop in second quarter profits to 564m Swiss francs ($US535m; £274m).

Barclays Life consists of the life assurance operations of Barclays and Woolwich, but has been closed to new business since 2001.

Barclays said it expected to make a £330m post-tax profit on the sale to Swiss Re.

Both Barclays and Swiss Re have been hit by the credit crunch, but Barclays is under more pressure to raise additional capital to improve its balance sheet.

Barclays recently carried out a rights issue to raise cash because of continued uncertainty in credit markets. While the bank secured £4.5b from investors, the take-up by ordinary shareholders was low.