Phoenix Group, the largest life and pensions consolidator in Europe is all set to buy the British insurance unit of Swiss Re AG SRENH.S in a cash-and-shares deal worth 3.2 billion pounds. The deal came after ReAssure like Phoenix specializes in closed life insurance books, shelved a planned initial public offering (IPO) earlier this year. It’s the UK insurer’s biggest deal to date as it bulks up on policies closed to new customers. This deal is awaited to bring in added cash flows of nearly 7 billion pounds over time. Moreover, the Phoenix Chief Executive Clive Bannister also claimed that the deal would also give the company an “enhanced platform to pursue further growth opportunities, including in the active market for ensuring defined benefit, or final salary, pension schemes, so-called ‘bulk annuities’.
Swiss Reinsurance the world’s second-largest reinsurer, claimed that it would get a cash payment of 1.2 billion pounds and a stake of nearly 13% to 17% in Phoenix. On the other hand, ReAssure’s minority shareholder, MS&AD Insurance Group Holdings Inc 8725.T, will receive shares Phoenix representing an 11% to 15% stake. The firm estimated the transaction, expected to close in mid-2020, would have a positive impact on its Group Swiss Solvency Test (SST) ratio and economic profit and a negative impact on its US GAAP results in the fourth quarter of 2019. Whereas, the phoenix said that the deal will take Phoenix’s total assets to 329 billion pounds and is expected to generate 800 million pounds of cost and capital synergies.