Swiss Reinsurance to Buy Life Re for $1.8 Billion

Swiss Reinsurance Co., the world’s second-largest reinsurer, agreed to pay $1.8 billion for Life Re Corp. to expand its U.S. life and health business, the companies said Monday.

Zurich-based Swiss Re said it will pay $95 a share for Life Re, whose revenue was about $646 million last year. The price is a premium of 6.7% to Life Re’s closing price Friday, when shares of the Stamford, Conn.-based company rose 5.1%.

The transaction would help Swiss Re offset narrowing profit margins in its property and casualty reinsurance business by getting more revenue from the faster-growing U.S. life and health businesses, analysts said.

Swiss Re is expanding as insurers and their commercial clients try to boost profits by keeping more of their risk, leaving less for reinsurers, which assume risk in exchange for portions of insurance premiums.

The property and casualty insurance industry’s shrinking profit margins are prompting mergers among reinsurers. German insurer Gerling bought Constitution Reinsurance Corp. of New York for $700 million last week. Warren Buffett’s Berkshire Hathaway Inc. said last month that it would pay $22 billion for General Re Corp., the largest U.S. reinsurer and the former parent company of Life Re.

Shares of Life Re rose $2.31 to close at $91.31 on the New York Stock Exchange. Swiss Reinsurance’s American depositary receipts rose $3 to $135 in over-the-counter trading.