Swiss Re's business unit Admin Re has agreed to acquire closed life insurance fund consolidator Guardian Financial Services from private equity firm Cinven for £1.6bn.
The acquisition will support Admin Re's ambition to become a leading closed life book consolidator in the UK, boosting its portfolio to four million policies in force.
The deal will diversify Admin Re's current business and increase its assets and reserves.
It is also expected to significantly increase Admin Re's gross cash generation capacity and return on equity and provide operational, capital and asset management synergies.
The acquisition is subject to regulatory approval and could be completed in early 2016.
In a statement, the reinsurer said Guardian Financial Services presented "an attractive opportunity to deploy part of excess capital above the Swiss Re Group's profitability hurdle rate of 11% [return on equity]; in line with the group strategy."
Cinven partner Caspar Berendsen said the Guardian sale demonstrated the successful execution of its 'buy' and build' consolidation strategy.
"The Cinven Financial Services team identified the consolidation opportunity for closed life books in the UK in 2010, driven by the fragmented nature of the life assurance industry, the ongoing pressure on new business volumes, regulatory change, and banks' and international insurers' desire to sell insurance assets or recycle capital", he said.
"The investment in Guardian has been a highly successful one for Cinven given our ability to drive considerable growth through our 'buy and build' strategy with the completion of four acquisitions. We have had the pleasure of working with a highly capable senior management team at Guardian to achieve this great result and we would like to wish them every success in the future."