British insurer Prudential is to buy Swiss Re's US-based life insurance business for £401 million in cash.

The purchase of SRLC America Holding Corp will be made through Prudential's US subsidiary Jackson National Life and is expected to close in the third quarter of 2012.

Prudential said the transaction is expected to contribute £100 million to Jackson National's pre-tax earnings in the first year of ownership. Pru estimates the embedded value of the acquisition will be £865 million at the end of June, before cost savings.

Swiss Re will retain a portion of the business through reinsurance arrangements to be set up before the deal closes.

Trading in shares of Prudential was suspended in Hong Kong today pending the announcement. The shares are due to resume trading in the afternoon.

The Hong Kong-listed shares of Prudential last closed down 1.6 per cent at HK$82.80. The London-listed shares closed down 3 per cent at 673 pence.

Reuters