Swiss Re raises 38m from sale of run off unit, amid ongoing fight for capital

SWISS REINSURANCE GROUP, the firm behind the construction of City skyscraper the Gherkin, has sold off its run-off management unit in a deal valued at up to &pound;38m. <br /><br />The firm has sold its PRO unit to UK-based run-off firm consolidator Tawa, as it fights to offset losses made from investments turning sour in the credit crunch. <br /><br />Reinsurers provide insurance to insurers, allowing them to mitigate the risks they are taking on. Run-off management firms specialise in running portfolios of reinsurance contracts that are no longer actively underwriting deals. <br /><br />Tawa said in a statement it had snapped up PRO for a cash payout of &pound;4m and deferred consideration of up to &pound;12m, depending on the unit&rsquo;s earnings over the five years to the end of 2014. Plus, prior to the acquisition Swiss Re is set to receive dividends of &pound;22m from the PRO companies.<br /><br />PRO marks a key acquisition for Tawa as the consolidator continues to snap up similar businesses with an eye to creating a single run-off giant. <br />Chief executive Gilles Erulin said as part of the deal Swiss Re has agreed to continue to use PRO as its preferred run-off management provider.<br /><br />Tawa also yesterday issued interim results for the six months to end-June. It said it had made a pre-tax loss of $2.1m (&pound;1.3m) over the period, compared to an $11.7m profit in the same period the previous year.