The Swiss Life Group is taking another significant step forward in the implementation of its strategy by selling its UK life business to Resolution Life Group for GBP 205 million (around CHF 445 million). The Swiss Life Group will thus increase its financial flexibility, since loans of approximately CHF 400 million will be repaid to Swiss Life Holding in connection with the transaction. While a statutory profit of around CHF 50 million will be generated, under International Financial Reporting Standards (IFRS) there will be a one-time charge on Group earnings for the 2004 financial year of around CHF 120 million.
The Swiss Life Group is taking another significant step forward in the implementation of its strategy: it is selling its closed UK life business for GBP 205 million (around CHF 445 million) to Resolution Life Group, a company specialising in the management of closed life funds. The price is equivalent to 76% of the projected embedded value at 31 December 2004 of the companies being sold. The transaction is structured as a clean sale of Swiss Life (UK) Group plc, Swiss Life's UK holding company, and all of its subsidiaries. The transaction is conditional upon regulatory approval by the UK Financial Services Authority and is expected to be completed by the end of the first quarter of 2005.
Rolf Dörig, CEO of the Swiss Life Group, commented: "The transaction will further reduce complexity in our Group and represents a clean exit from the United Kingdom, where we are eliminating the operational risk and providing security for our shareholders. Clients and employees can be assured that they will be in the hands of a company specialised in the management of closed life funds."
This transaction will increase the Swiss Life Group's financial flexibility since loans of approximately CHF 400 million will be repaid to Swiss Life Holding, thus enabling the allocation of capital within the Group to be optimised. While the transaction will result in a statutory profit of around CHF 50 million, under IFRS there will be a one-time charge on Group earnings for the 2004 financial year of around CHF 120 million. The differing impact is a consequence of the different valuation principles. In the local financial statements these participations are recognised on the balance sheet at cost, while under IFRS individual assets and liabilities are to be consolidated. The Swiss Life Group expects the transaction to have a modest positive impact on EU Group solvency.
Under Swiss Life's strategy, the UK life business, with its special focus on providing risk protection, a capital-intensive niche market, has no longer been core to the Group's business since September 2002. Swiss Life UK ceased writing new individual and group business in 2003.
The reinsurance contract concluded with Unum for Swiss Life UK's Group Income Protection claims portfolio and the service agreement with Claims Services International Ltd., a fully owned Unum subsidiary, for the administration of claims will pass to the buyer as part of this transaction.
Unum and Swiss Life (UK) will both remain Swiss Life Network partners for servicing multinational clients in the UK.
Rolf Dörig, CEO of the Swiss Life Group, commented: "The transaction will further reduce complexity in our Group and represents a clean exit from the United Kingdom, where we are eliminating the operational risk and providing security for our shareholders. Clients and employees can be assured that they will be in the hands of a company specialised in the management of closed life funds."
This transaction will increase the Swiss Life Group's financial flexibility since loans of approximately CHF 400 million will be repaid to Swiss Life Holding, thus enabling the allocation of capital within the Group to be optimised. While the transaction will result in a statutory profit of around CHF 50 million, under IFRS there will be a one-time charge on Group earnings for the 2004 financial year of around CHF 120 million. The differing impact is a consequence of the different valuation principles. In the local financial statements these participations are recognised on the balance sheet at cost, while under IFRS individual assets and liabilities are to be consolidated. The Swiss Life Group expects the transaction to have a modest positive impact on EU Group solvency.
Under Swiss Life's strategy, the UK life business, with its special focus on providing risk protection, a capital-intensive niche market, has no longer been core to the Group's business since September 2002. Swiss Life UK ceased writing new individual and group business in 2003.
The reinsurance contract concluded with Unum for Swiss Life UK's Group Income Protection claims portfolio and the service agreement with Claims Services International Ltd., a fully owned Unum subsidiary, for the administration of claims will pass to the buyer as part of this transaction.
Unum and Swiss Life (UK) will both remain Swiss Life Network partners for servicing multinational clients in the UK.
Swiss Life
The Swiss Life Group is one of Europe's leading providers of life insurance and long-term savings and protection. The Swiss Life Group offers individuals and companies comprehensive advice across a broad range of products via agents, brokers and banks in its domestic market, Switzerland, where it is market leader, and selected European markets. Multinational companies are serviced with tailor-made solutions by a network of partners in over forty countries.
Swiss Life Holding, registered in Zurich, was founded in 1857 as the Swiss Life Insurance and Pension Company. Shares of Swiss Life Holding are listed on the SWX Swiss Exchange (SLHN). The enterprise employs around 10 000 people worldwide.
Resolution Life Group
Resolution was formed earlier this year to buy and run off closed UK life funds and represents an injection of new capital into the financial sector. Acting as an industry utility, Resolution aims to offer a private sector response to the growing number of closed funds, balancing the needs of:
- current owners of closed funds, who wish to release capital for their core businesses
- policyholders, who want stability and guidance over policy options
- investors, seeking a stable long-term return as the funds mature
Resolution intends to make further acquisitions and expects to seek a public listing to fund growth in the medium term.
Cautionary statement regarding forward-looking information
This publication contains specific forward-looking statements, e.g. statements including terms like “believe”, “assume”, “expect” or similar expressions. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may result in a substantial divergence between the actual results, financial situation, development or performance of the company and those explicitly or implicitly presumed in these statements. Against the background of these uncertainties readers should not place undue reliance on forward-looking statements. The company assumes no responsibility to update forward-looking statements or to adapt them to future events or developments.