"This is both strategically and financially a very attractive transaction that creates significant value for our shareholders," said John Coomber, Swiss Re chief executive officer. "The acquisition of GE Insurance Solutions provides a powerful business fit offering tremendous opportunities to strengthen our franchise."

Mr. Coomber continued: "Over the past several months, we and our advisors have undertaken a thorough due diligence review of GE Insurance Solutions, including its reserves. This will enable us to incorporate this business in line with our own reserve standards. Swiss Re expects the transaction to be accretive to earnings per share and return on equity, beginning in 2007, the first full year after closing."

Under the terms of the transaction, Swiss Re will purchase GE Insurance Solutions for $6.8 billion, subject to closing adjustments. This represents 76 percent of the approximate $8.9 billion U.S. GAAP book value (before additional reserves) of the businesses to be acquired.

As part of this transaction GE Insurance Solutions will provide approximately $3.4 billion pre-tax in additional reserves to the extent permitted by accounting rules.

Swiss Re said the consideration to be paid to GE will consist of cash, Swiss Re shares, mandatory convertibles and notes. As a result, GE is expected to hold in excess of 10 percent of Swiss Re shares.

Also under the terms of the agreement, Dennis D. Dammerman, the GE board vice chairman, will stand for election to the Swiss Re board of directors at a January 2006 stockholders meeting that will be asked to approve the creation of authorized capital and the increase of conditional capital.

Jacques Aigrain, who will succeed John Coomber as CEO of Swiss Re on Jan. 1, 2006, added: "This transaction further enhances our client base and our product capabilities in attractive lines of business. Together, Swiss Re and GE Insurance Solutions will offer clients the security of the world's largest and most diversified reinsurance provider."

He called GE's retention of an equity interest in the combined reinsurance business "a strong endorsement of our business expertise and strategy."

"Over the past five years, we have fundamentally repositioned GE Insurance Solutions' business," said Jeffrey R. Immelt, CEO of GE. "We believe that Swiss Re, with its reinsurance focus and its proven track record of successfully integrating acquired businesses, is ideally positioned to develop GE Insurance Solutions' business further for the benefit of clients and GE's shareholders."

In connection with the transaction, Swiss Re said it plans to raise up to $7.5 billion (CHF 9.8 billion) in new capital. This includes up to $5.5 billion (CHF 7.2 billion) in shares and mandatory convertibles.

The shares to GE will be issued without subscription rights to existing shareholders. In addition, Swiss Re plans to offer shares through a rights offering and mandatory convertibles to the capital markets. The actual mix of these securities will be determined based on market conditions. Exact terms will be announced at the time of these offerings.

The company said closing is expected to occur by mid-2006.

Separately, Swiss Re also announced that Pierre Ozendo, current head of Swiss Re's client markets in Asia, will succeed Andreas Beerli as head of property and casualty client markets for the Americas. The appointment will become effective Jan. 1, 2006.

Swiss Re said that Mr. Ozendo, a U.S. citizen, has led Swiss Re's successful expansion in Asia and will now be responsible for the effective integration of GE Insurance Solutions and Swiss Re's property-casualty businesses in the Americas, building on the combined strengths of the two franchises for the future.