Swiss Re Said to Be in Talks to Buy Prime Reinsurance From Citi

Photographer: Philipp Schmidli/Bloomberg

Swiss Re AG is in talks to buy Prime Reinsurance Co., a unit of Citigroup Inc. set up after the financial crisis to ease the New York bank’s spinoff of insurer Primerica Inc., people with knowledge of the matter said.

Zurich-based Swiss Re is negotiating a deal that would value the subsidiary -- which does business as Prime Re -- at about $500 million, said one of the people, who asked not to be identified because the information is private. An agreement hasn’t been finalized and talks could still fall through, the people said.

Citigroup set up Burlington, Vermont-based Prime Re to house some outstanding term-life policies of Primerica, a move intended to make its 2010 public offering more palatable to investors.

Representatives of Swiss Re and Citigroup declined to comment.

Prime Re is a life reinsurer, which means it takes on risks from other insurers tied to death, retirement and other benefits that can take decades to expire. Citigroup began exploring a sale of Prime Re almost a year ago.

Swiss Re, Europe’s second-biggest reinsurer, has turned to dealmaking to maintain good returns for shareholders as record-low interest rates depress investment earnings. It remains acquisitive after completing the 1.6 billion-pound ($2.3 billion) purchase of U.K. life insurer Guardian Holdings Europe Ltd., Chief Financial Officer David Cole said in an interview with Bloomberg in February.

Citigroup has been selling businesses such as subprime lender OneMain Financial Holdings Inc. and retail banks across Latin America as it narrows its focus on retail, corporate and investment banking.

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