Phoenix, Stan Life owner, buys ReAssure for £3.2bn

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Closed life and pension fund consolidator Phoenix Group Holdings plc, owner of Edinburgh-based Standard Life Assurance, on Friday agreed to buy ReAssure, the British business of Swiss Re, for £3.2 billion in cash and shares.

The deal will take Phoenix’s total assets to £329 billion and is expected to generate £800 million of cost and capital synergies.

The ReAssure deal follows Phoenix’s £2.9 billion deal for Standard Life Assurance in 2018 — although Standard Life Aberdeen retained a big stake in the combined group.

According to Phoenix Group’s website, Standard Life Aberdeen retained a 25.71% stake in the firm.

However, on Friday, Phoenix said: “On a pro-forma basis, taking into account the shares issued as a part of the transaction, Phoenix’s strategic partner and current largest shareholder, Standard Life Aberdeen, will have an ownership stake of c.14.5% and continue to have the right to appoint one non-executive director to the Phoenix Group board.”

Standard Life Aberdeen CEO Keith Skeoch said: “Today’s announcement by Phoenix illustrates the substantial consolidation opportunities that exist within the UK and European insurance sectors which was a key factor in our making our strategic investment in Phoenix.

“As a leading provider of investment solutions to both Phoenix and ReAssure we will be working with Phoenix to understand the additional opportunities that the proposed acquisition creates for Standard Life Aberdeen.”    

Phoenix Group is Europe’s largest owner of life assurance funds closed to new customers.

Swiss Re said it would get a cash payment of £1.2 billion and a stake in Phoenix of 13% to 17%.

ReAssure’s minority shareholder, MS&AD Insurance Group Holdings Inc, will receive shares in Phoenix representing an 11% to 15% stake. 

Outgoing Phoenix chief executive Clive Bannister 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.

“The deal confirms Phoenix’s position as Europe’s largest life and pensions consolidator with £329 billion of assets under administration and 14.1 million policies and will give us an enhanced platform to pursue further growth opportunities, including Bulk Purchase Annuities.

“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.”