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Prudential plc – PUK – To acquire the US holding company of REALIC for £398m

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Jackson National Life Insurance Company , an indirect wholly-owned subsidiary of Prudential plc (NYSE:PUK), entered into an agreement to buy SRLC America Holding Corp from Swiss Re. Jackson will pay US$621 million (£398 million) in cash for the business, financed from its own resources. The purchase price will be adjusted as explained in more detail in the explanatory notes below. Swiss Re will retain a portion of the SRLC business through reinsurance arrangements to be undertaken prior to completion. The transaction is subject to regulatory approval and is expected to complete in the third quarter of 2012.

Financially attractive

  • Accretive to IFRS and EEV earnings immediately; Accretion to Jackson’s IFRS pre-tax earnings is estimated at £100 million in the first year of ownership
  • Represents price-to-European Embedded Value of approximately 46 per cent
  • Capital efficient bolt-on acquisition entirely funded by Jackson’s own resources
  • Modest impact on the Group’s IGD excess capital of £0.1 billion

Strategically enhancing


  • Increases scale and diversifies Jackson’s earnings
  • Adds high-quality seasoned and stable income stream

Increases Jackson 2013 cash net remittance objective

  • 2013 Jackson annual net remittance objective increased from £200 million to £260 million

SRLC is a life insurance business that sits within the US division of Swiss Re’s Admin Re. The primary operating subsidiary of SRLC is Reassure America Life Insurance Company (“REALIC”), which since 1995 has completed a significant number of transactions through stock acquisitions and reinsurance arrangements and has acquired a diverse portfolio of traditional US life business. The earnings of SRLC are derived from seasoned, long-duration cash flows generated principally from term life, whole life and basic universal life products. Jackson will acquire assets related to the subject business of approximately £6.7 billion and approximately 1.5 million policies.

Commenting on the acquisition, Mike Wells, President and Chief Executive Officer, Jackson, said: “This bolt-on acquisition is in-line with our strategy and is a great opportunity to increase the scale of our life business. It is a capital efficient transaction that will produce an attractive IRR (internal rate of return) and payback period commensurate with what we achieve organically on writing new business. It helps diversify Jackson’s earnings by increasing the amount of income we generate from underwriting activities thereby enhancing the quality of our earnings and our ability to remit more cash to the Group.”

About Prudential plc – PUK
Prudential plc (PUK) is incorporated in England and Wales, and its affiliated companies constitute one of the world’s leading financial services groups. PUK provides insurance and financial services through its subsidiaries and affiliates throughout the world. It has been in existence for over 160 years and has £351 billion in assets under management (as at 31 December 2011). Prudential plc is not affiliated in any manner with Prudential Financial, Inc, a company whose principal place of business is in the United States of America.








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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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