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Phoenix acquires closed book consolidator for £3.2bn

Phoenix acquires closed book consolidator for £3.2bn

Phoenix Group is to acquire Swiss Re’s UK life assurance arm making it Europe’s largest life and pensions consolidator. 

Stock exchange announcements published this morning (December 6) showed Phoenix Group is to buy ReAssure Group, a life insurance closed book consolidator in the UK, after Swiss Re agreed to the sale.

Swiss Re and MS&AD (other shareholders) are to receive £3.2bn for ReAssure through a mixture of cash and shares in the Phoenix Group.

Swiss Re will receive a cash payment of £1.2bn, shares in Phoenix representing a 13-17 per cent stake and be entitled to a seat on its board of directors. MS&AD will receive shares in Phoenix representing an 11-15 per cent stake.

The deal comes after Swiss Re announced last year it was planning to float ReAssure in a bid to take advantage of opportunities in the market.

Phoenix expects the acquisition to generate additional cash flows of £7bn over time — £2.7bn by 2023 and £4.3bn from 2024 — as well as £800m of cost cutting through the merger of the two companies.

According to Phoenix the move will bring the firm’s assets under administration to £329bn from 14m policies and will boost dividends by roughly 3 per cent.

The announcement also showed the company was eyeing up further acquisitions in the UK, stating Phoenix had a “range of opportunities” for growth including further mergers and acquisitions in the UK, Germany and Ireland.

Completion of the acquisition is targeted for mid-2020, with shareholder information being issued in Q1 of next year.

Phoenix’s chief executive Clive Bannister said: “This is a highly attractive acquisition for Phoenix that follows our growth strategy and delivers value to our shareholders.

“We also welcome Swiss Re and MS&AD as significant new shareholders and see their investment as a recognition of the many benefits that this combination can bring.”

Christian Mumenthaler, group CEO of Swiss Re, said the firm was pleased to have found a “strong buyer” for ReAssure and delivered on the previously stated objective of splitting up the business.

He added: “Phoenix is a natural acquirer of ReAssure and has a proven track record of delivering value to both shareholders and customers.  

“We look forward to working with Phoenix and supporting them in achieving their vision of being Europe's leading life consolidator.”

Keith Skeoch, chief executive of Standard Life Aberdeen, which has invested in Phoenix, said the announcement illustrated the “substantial consolidation opportunities” in the UK and European insurance sectors and that he would be working with Phoenix to understand the “additional opportunities” the move created for Standard Life Aberdeen.

imogen.tew@ft.com

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