Swiss Re recently announced that it has completed the successful acquisition of GE Insurance Solutions. The acquisition creates the world’s largest and most diversified global reinsurer and adds further momentum to Swiss Re’s sustainable earnings growth. Having completed the acquisition, Swiss Re is planning to launch its products in the Middle East markets very soon.
"The acquisition of GE Insurance Solutions consolidates further Swiss Re’s global leadership position," says Swiss Re CEO Jacques Aigrain. "We will now move swiftly to integrate GE Insurance Solutions, adding new talents to our global workforce and building on the benefits of an enlarged client base and expanded product offerings."
Swiss Re acquired GE Insurance Solutions for USD 6.8 billion plus closing adjustments of USD 0.6 billion for a total of USD 7.4 billion. Between 18 November 2005 and closing, the book value of GE Insurance Solutions further increased by USD 1.7 billion through cash capital contributions from General Electric (GE) and earnings which Swiss Re reimbursed to GE on closing.
The closing of the acquisition concludes Swiss Re’s cost efficient financing package for the transaction, paid through cash, an at-market rights issue, mandatory convertibles and hybrid debt. The financing included USD 2.4 billion equivalent in new Swiss Re shares at a share price of CHF 87.58 (USD 72.07) issued to General Electric (GE). GE now owns 8.9% of Swiss Re’s share capital. As a result of the issuance of new shares to GE, the number of Swiss Re shares entitled to dividends increases by 33 300 957 shares to 358 212 933 shares.
In addition, Swiss Re issued mandatory convertible instruments (MCI) for USD 500 million to GE. The MCI will automatically convert into Swiss Re shares in three years.
With the transaction now closed, Swiss Re commences integrating GE Insurance Solutions, building on its talents, franchise and client base. Functions and teams will be merged, leading to an overall reduction of office locations as well as staff reductions in a number of locations. Through the organisational streamlining Swiss Re expects to capture cost synergies of at least USD 300 million per year, to be realised by the end of 2007. Overall the acquisition will be accretive to earnings already in 2007.
Swiss Re is the world’s leading and most diversified global reinsurer. The company operates through offices in over 30 countries. Founded in Zurich, Switzerland, in 1863, Swiss Re offers financial services products that enable risk-taking essential to enterprise and progress. The company’s traditional reinsurance products and related services for property and casualty, as well as the life and health business are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated "AA" by Standard & Poor’s, "Aa2" by Moody’s and "A+" by A.M. Best.
