UPDATE:Hannover Re Portfolio Buy Adds $30M+/Year To Pfts 5 Yrs
January 23 2009 - 8:16AM
Dow Jones News
Germany's Hannnover Re AG (HNR1.XWE) expects the acquisition of
a U.S. life reinsurance portfolio from Scottish Re Grp Ltd. (SKRRF)
to add more than $30 million annually to the group's profits over
the next five years, or EUR0.20 annually to earnings per share,
Chief Executive Zeller said on a conference call Friday.
The earnings boost will be on top of a "high-double-digit
million U.S. dollars" one-off contribution in 2009 due to the value
of the portfolio acquired, Zeller said.
The exact amount of the upfront profit has yet to be determined,
Zeller said.
After five years, the profit contribution will gradually decline
in subequent years, as the portfolio is in runoff, that is
gradually to be wound down.
Following the transaction, Hannover Re expects a
double-digit-percentage market share in the U.S. life reinsurance
market by 2011, up from currently around 1%.
Earlier Friday, Hannover Re said it is buying an individual life
reinsurance portfolio from Bermuda-based reinsurer Scottish Re
Group in a non-cash reinsurance and asset-purchase transaction.
The portfolio, dubbed ING Business, was originally bought by
Scottish Re from ING Groep NV (ING) in December 2004. Effectively,
Hannover Re is replacing Scottish Re as reinsurer for the ING U.S.
life reinsurance portfolio, a Hannover Re spokesman said.
"There was no purchase price," Zeller said when asked to comment
about financial details of the deal.
Under the deal, Scottish Re will transfer $1.3 billion
liabilities and assets in cash and/or securities acceptable to
Hannover Re, Zeller said.
ING has committed to support the transaction on a long-term
basis by agreeing to provide more than $3 billion of collateral
initially, which will grow to $5 billion over time, Zeller said. In
addition, the deal contributes numerous business relationships from
ING and Scottish Re, as there were only small client overlaps of
around 10% to 15% with Hannover Re's previous clients in U.S. life
reinsurance, Zeller said.
Company Web site: www.hannover-re.com
-By Ulrike Dauer, Dow Jones Newswires; +49 69 29725 500;
ulrike.dauer@dowjones.com
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