The deal will be made through Prudential’s American subsidiary Jackson National Life and will see the firm acquire approximately 1.5m policies and assets worth around £6.7bn.
“This bolt-on acquisition is in-line with our strategy and is a great opportunity to increase the scale of our life business. It is a capital efficient transaction that will produce an attractive internal rate of return and payback period commensurate with what we achieve organically on writing new business,” said Jackson National chief executive Mike Wells.
Swiss Re said it “sees attractive growth potential in the UK and Continental Europe” and will use the proceeds from this deal to invest in more profitable businesses.
The transaction, which is due to complete at the end of September, is expected to contribute £100m to Jackson National’s pre-tax earnings in the first year.
Pru estimates the embedded value of the acquisition will be £865m at the end of June, before cost savings are taken into account.
Barrie Cornes, an analyst at Panmure Gordon, called the purchase “a very attractive acquisition” which will provide “further synergy benefits” and fits the Prudential’s overall strategy.
This is Prudential’s first takeover since the firm’s attempt to buy Asian insurer AIA collapsed in 2010, leaving it with a £377m bill for costs.
Shares in the firm closed up 0.8 per cent in London.