Swiss Re's ReAssure valued at up to $4.2 billion IPO

By John Revill

ZURICH (Reuters) - UK life assurance business ReAssure will be valued at up to 3.3 billion pounds ($4.2 billion) when it floats on the London Stock Exchange, its largest shareholder Swiss Re said on Thursday.

Swiss Re, the world's second-largest reinsurance company, set a price range of 2.80 to 3.30 pounds for shares in the flotation, implying a market capitalisation of 2.8 billion to 3.3 billion pounds when the float takes place next month.

Zurich-based Swiss Re is spinning off ReAssure to put the business under a more favourable regulatory regime and give it easier access to capital to fund its expansion.

ReAssure, Britain's sixth-largest life insurer, has 68.7 billion pounds of assets under administration and focuses on so-called closed book policies that are shut to new customers.

Under the flotation plans, Swiss Re would cut its stake in ReAssure to below 50% from 75% now. Japan's MS&AD Insurance Group Holdings intends to keep its holding at 25% after the initial public offering.

DIVIDEND PLANS

The offer is expected to deliver a free float of 26% of ReAssure's issued share capital. Shares representing up to 15% of the initial offer will be made available as an over-allotment option, which if exercised will take the free float up to nearly 30%.

Swiss Re said the IPO prospectus is due to be published later on Thursday, pending approval from Britain's Financial Conduct Authority.

ReAssure is expected to pay out 1.325 billion pounds in dividends over the next five years, with a 74 percent payout ratio, according to flotation documents.

An interim dividend for 2019 will be available to all shareholders, including those shareholders coming in at IPO

The company will have an implied dividend yield of 9.5% to 8% when it floats, with unconditional trading in ReAssure stock is expected to start on July 16.

Joint global coordinators are Morgan Stanley, Credit Suisse and UBS, while BNP Paribas and HSBC are acting as joint bookrunners. ($1 = 0.7885 pounds)

(Reporting by John Revill, additional reporting by Arno Schuetze; Editing by Michael Shields/Keith Weir)