Clive Bannister set for final flourish with £3.2bn ReAssure deal

Marco Green
December 8, 2019

Thierry Léger, CEO of Swiss Re's Life Capital Business Unit, said: "The expertise of ReAssure's team combined with that of Phoenix will create a very powerful closed book consolidator".

Swiss Re said the transaction will reinforce Phoenix's position as Europe's largest life and pensions consolidator with £329 billion ($432.2 billion) of assets under administration and more than 14.1 million policies, giving it an enhanced platform to pursue further growth opportunities.

"We believe this transaction maximizes long-term value for Swiss Re shareholders", Chief Executive Christian Mumenthaler said.

The Swiss reinsurer Swiss Re sells its United Kingdom division ReAssure to the Phoenix Group insurance services provider.

The potential buyer has said the deal would be expected to generate an additional cash flow of about £7bn over time, of which in the region of £2.7bn would be made between 2020 and 2023 and a further £4.3bn from 2024 onwards.

Following the acquisition, each of Swiss Re and MS&AD will have strategic shareholdings totalling approximately 28 per cent of the enlarged Phoenix Group.

"The purchase price, at 91 per cent 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.

In an announcement this morning (December 06), the Zurich-headquartered group confirmed that it has entered into an agreement with the European life and pensions consolidator for ReAssure's sale, which values the subsidiary at £3.25 billion (around US$4.28 billion).

SLA chief executive Keith Skeoch said: "Today's announcement by Phoenix illustrates the substantial consolidation opportunities that exist within the United Kingdom and European insurance sectors, which was a key factor in our making our strategic investment in Phoenix". ReAssure is a life and pensions company that buys and administers closed books of business from other companies.

The proposal for the acquisition of ReAssure comes after Swiss Re pulled June plans for its float on the London Stock Exchange and remained on the lookout to dispose of the business to better streamline its operations to continental Europe.

Phoenix Group Holdings has announced its has proposed the acquisition of ReAssure Group for £3.2bn.

The financial impact of the transaction on Swiss Re will be subject to movements in Phoenix's share price prior to closing of the sale.

The pipeline for large deals and consolidations in the insurance space remains strong with both Aviva and M&G holding legacy books that have been speculated to hit the market.

As part of the deal, which is expected to close in the middle of next year, Swiss Re will reacquire the 25% stake in ReAssure now held by MS&AD.

Other reports by Click Lancashire

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