Swiss Re buys Barclays life unit

Barclays has agreed to sell its life assurance arm to Swiss Re for £753m ($1.48bn; 949m euros) in cash.

Swiss Re, which hopes to boost its Admin Re business in the UK, will acquire 760,000 life insurance and pension policies and annuity contracts.

Those policies represent about £6.8bn in invested assets.

The move comes as Swiss Re, the world's largest reinsurance firm, reported a 53% drop in second quarter profits to 564m Swiss francs ($535m; £274m).

"The financial market turbulence continues, but, despite this, we are strongly capitalised and our investment portfolio remains sound," said Swiss Re's chief executive Jacques Aigrain.

Market opportunities

Barclays Life consists of the life assurance operations of Barclays and Woolwich, but has been closed to new business since 2001.

Barclays said it expected to make a £330m post-tax profit on the sale to Swiss Re, while the Swiss firm said the move illustrated that it could take advantage of tough markets.

"The difficult market environment also creates new opportunities," Mr Aigrain said.

"Swiss Re has the execution capability and capital strength to seize these opportunities."

Both Barclays and Swiss Re have been hit by the credit crunch, but Barclays is under more pressure to raise additional capital to improve its balance sheet.

Barclays recently carried out a rights issue to raise cash because of the continued uncertainty in credit markets.

While the bank secured £4.5bn from investors, the take-up by ordinary shareholders was low.