Swiss Re’s UK unit ReAssure Group Plc, which focuses exclusively on the acquisition and management of closed books of life insurance policies, will be sold to Phoenix Group Holdings Plc.
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).
Lifting the lid on the transaction, the global reinsurer noted: “Swiss Re will receive a cash payment of £1.2 billion, shares in Phoenix representing a 13% to 17% stake, and be entitled to a seat on its board of directors. ReAssure’s minority shareholder, MS&AD Insurance Group Holdings Inc, will receive shares in Phoenix representing an 11% to 15% stake.
“The respective number of shares Swiss Re and MS&AD receive will depend on Phoenix’s share price at closing of the sale, while the total shareholding of both companies is fixed at approximately 28%.”
According to Swiss Re group chief executive Christian Mumenthaler, they view the sale as a means to maximise long-term value for shareholders.
“Swiss Re’s goal has been to deconsolidate ReAssure, and we are pleased to have found a strong buyer for the business,” stated the CEO. “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.”
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 currently held by MS&AD. Meanwhile Swiss Re’s board of directors will assess the optimal use of the sale proceeds, taking into account the group’s capital position as of the end of 2019.