Swiss Re to buy into Li’s FWD to grow in Asia

SWISS Re, the world’s secondbiggest reinsurer, will invest as much as $425m in Richard Li’s FWD Group as it seeks growth in Asia.

The company would buy 12.3% of FWD from Pacific Century, also owned by Mr Li, a son of Asia’s richest man, and invest in its expansion across Asia, Zurich-based Swiss Re said yesterday.

The transaction, expected to close in the first quarter of next year, reflected the company’s “commitment to high-growth markets” including Asian countries, it said.

Swiss Re is seeking to bolster its primary insurance unit with acquisitions in countries such as China, India and Brazil.

Pacific Century bought ING’s life insurance assets in Hong Kong, Macau and Thailand, and the general insurance and pensions business in Hong Kong, renaming the operations FWD in August.

“The transaction is a financial investment and proof of a sound capital base at the group holding level being invested into the promising Asian life and health growth market,” Zurich-based Vontobel analyst Stefan Schuermann said in a report to investors.

“We expect Swiss Re to report a solid third quarter, further enhancing cash generation and prospects in regard to the dividend,” he said.

Swiss Re stock rose 0.2% to Sf76.95 in early trade in Zurich, valuing the company at Sf28.5bn ($31.2bn). The shares have risen 17% this year.

The stake Swiss Re would finally own in FWD would depend on the amount of committed capital deployed, Swiss Re said. “FWD is an exciting new regional player which will bring attractive insurance products to help address the rapidly growing needs of consumers and significant protection gaps across Asia,” Swiss Re CEO Michel Lies said.

Pacific Century bought the insurance and pension units of ING last year in a transaction that valued the life businesses at 24.3 times estimated 2012 earnings and 1.9 times estimated book value of à865m, ING said at the time.