Swiss Re Ltd., the world’s second-biggest reinsurer, agreed to buy the U.K. pensions business of HSBC Holdings Plc for an undisclosed sum.
Underlying assets under management forming part of the deal are valued at about 4.2 billion pounds ($7.1 billion) at the end of last year, the companies said in statements today. The transaction, between HSBC Life (UK) Ltd. and Swiss Re’s Admin Re unit, is scheduled to be completed in the second half of 2015.
Admin Re, one of the three business pillars of Zurich-based Swiss Re, buys and manages blocks of closed life and health insurance funds, mainly in the U.S. and the U.K., which no longer sell new contracts. The unit has been looking for joint-venture partners after merger talks with Phoenix Group Holdings failed in November.
“The transaction is an attractive opportunity for Admin Re and confirms our commitment to execute on the strategy to grow the Admin Re business in the U.K.,” John Dacey, chairman of Admin Re, said in a statement. “Transactions such as this allow Admin Re to maintain and increase the scale of its business and provide attractive shareholder returns.”
The sale includes more than 400,000 corporate and individual pensions policies, and an associated annuities book, “by way of an insurance business transfer scheme,” HSBC said in the statement. HSBC Global Asset Management will remain the investment manager of the underlying assets. The lender will continue to offer pension products underwritten by other providers, the bank said.
HSBC, Europe’s biggest bank, has sold or closed more than 60 businesses since 2011 as Chief Executive Officer Stuart Gulliver seeks to controls costs and increase profitability. The deal comes after U.K. Chancellor of the Exchequer George Osborne scrapped rules in his March budget that pushed retirees to buy an annuity with their pension savings.