UPDATE:Hannover Re Portfolio Buy Adds $30M+/Year To Pfts 5 Yrs

Germany's Hannnover Re AG (HNR1.XWE) expects the acquisition of a U.S. life reinsurance portfolio from Scottish Re Grp Ltd. (SKRRF) to add more than $30 million annually to the group's profits over the next five years, or EUR0.20 annually to earnings per share, Chief Executive Zeller said on a conference call Friday.

The earnings boost will be on top of a "high-double-digit million U.S. dollars" one-off contribution in 2009 due to the value of the portfolio acquired, Zeller said.

The exact amount of the upfront profit has yet to be determined, Zeller said.

After five years, the profit contribution will gradually decline in subequent years, as the portfolio is in runoff, that is gradually to be wound down.

Following the transaction, Hannover Re expects a double-digit-percentage market share in the U.S. life reinsurance market by 2011, up from currently around 1%.

Earlier Friday, Hannover Re said it is buying an individual life reinsurance portfolio from Bermuda-based reinsurer Scottish Re Group in a non-cash reinsurance and asset-purchase transaction.

The portfolio, dubbed ING Business, was originally bought by Scottish Re from ING Groep NV (ING) in December 2004. Effectively, Hannover Re is replacing Scottish Re as reinsurer for the ING U.S. life reinsurance portfolio, a Hannover Re spokesman said.

"There was no purchase price," Zeller said when asked to comment about financial details of the deal.

Under the deal, Scottish Re will transfer $1.3 billion liabilities and assets in cash and/or securities acceptable to Hannover Re, Zeller said.

ING has committed to support the transaction on a long-term basis by agreeing to provide more than $3 billion of collateral initially, which will grow to $5 billion over time, Zeller said. In addition, the deal contributes numerous business relationships from ING and Scottish Re, as there were only small client overlaps of around 10% to 15% with Hannover Re's previous clients in U.S. life reinsurance, Zeller said.

Company Web site: www.hannover-re.com

-By Ulrike Dauer, Dow Jones Newswires; [phone]; [e-mail]

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary. You can use this link on the day this article is published and the following day.