Phoenix Group to acquire ReAssure from Swiss Re for £3.2bn

Phoenix acquisition of ReAssure : Life consolidator Phoenix Group has signed a cash-cum-stock deal worth £3.25 billion to acquire UK-based life and pensions company ReAssure Group from Swiss Re, as per the latest insurance acquisition news.

ReAssure Group is a life insurance closed book consolidator, which is engaged in buying and administering closed books of business from other firms. Claimed to have nearly 2.2 million policies on its books, the life and pensions firm boasts of managing investments of approximately £39 billion for its customers.

ReAssure Group will be acquired by Phoenix directly from Swiss Re and indirectly from Japanese insurance company MS&AD Insurance Group, which has a 25% stake in the business. Swiss Re will acquire the 25% stake from MS&AD Insurance Group for £1 billion worth of shares in Phoenix as per their value at the time of signing the deal.

Phoenix acquisition of ReAssure will provide additional scale to the former’s Heritage business to create an enlarged group that will have £329 billion of assets under administration to go along with 14.1 million policies. The acquisition, as a result, will confirm its position as the largest life and pensions consolidator in Europe, said Phoenix.

Commenting on Phoenix acquisition of ReAssure, Clive Bannister – Phoenix Group CEO, said: “This is a highly attractive acquisition for Phoenix that follows our growth strategy and delivers value to our shareholders.

“The acquisition will contribute £7 billion of incremental cash generation and give us the opportunity to capture significant cost and capital synergies.

“The purchase price, at 91% of ReAssure’s pro-forma Solvency II Own Funds, is attractive; as is the efficient financing structure. Together, this enables us to maintain our balance sheet strength.”

Phoenix Group to acquire ReAssure from Swiss Re. Juan Carlos Muñoz/Wikimedia Commons.

As per the terms of the deal, Swiss Re will get £1.2 billion along with 13-17% stake in Phoenix, while MS&AD Insurance Group will hold 11-15% stake. The combined stake of Swiss Re and the Japanese insurance company will be fixed at about 28% with only their individual stakes to decided at the time of closing of the deal based on Phoenix’s share price.

Phoenix’s current largest shareholder – Standard Life Aberdeen will have 14.5% stake in the life and pensions consolidator.

Christian Mumenthaler – Swiss Re Group CEO, commenting on Phoenix acquisition of ReAssure, said: “We believe this transaction maximises long-term value for Swiss Re shareholders. Swiss Re’s goal has been to deconsolidate ReAssure, and we are pleased to have found a strong buyer for the business.

“The strategic rationale for the combination of the businesses is compelling, and we look forward to working together with Phoenix and to sharing the financial benefits of the combination.”

Phoenix acquisition of ReAssure is expected to be wrapped up in mid-2020 subject to approvals from the former’s shareholders, regulatory bodies, and anti-trust authorities, as per the latest insurance acquisition news.