Hannover Re buys ING-written life portfolio from Scottish Re
24 January 2009
Hannover Re, Germany's second-biggest reinsurer, agreed to take over Scottish Re Group's business of reinsuring US life-reinsurance policies written by ING Groep NV. With this acquisition, Hannover will become the fifth-biggest individual life reinsurer in the US, the company said on Friday.
Hannover Re will also ''acquire the policy administration systems of Scottish Re as well as other assets supporting the US mortality reinsurance business,'' it said today in a statement distributed by the Hugin newswire. The acquired business ''is estimated to generate a premium volume of about $1.2 billion,'' Hannover Re said.
The Hanover, Germany-based reinsurer has said it wants to expand its less volatile life-reinsurance business through acquisitions to limit the profit swings that follow property and casualty claims from natural disasters. Hannover Re abandoned its 2008 profit target of 21 October after impairments on equity investments and high catastrophe claims led to a net loss of €142.8 million ($184.7 million) in the first nine months. The company may report its first full-year loss since it was founded in 1966.
Scottish Re originally had targeted a sale of its entire North American Segment, but following the historic disruption in the financial markets in late September, it was unable to consummate such a transaction. In an effort to find ways to address its acute capital, liquidity and collateral needs and to allay concerns of its regulators, Scottish Re pursued the sale of a specific block of individual life reinsurance in its North America Segment.
"This transaction is the next step in Scottish Re's previously disclosed change to its strategic focus to preserve capital and mitigate growing liquidity demands," commented Paul Goldean, CEO of Scottish Re. "Following this transaction, we will continue to manage our Financial Solutions business as well as maintain one of the 10 largest in-force portfolios of traditional life business in North America."