FTSE 100 life insurer Phoenix Group is to buy its biggest rival, ReAssure, from Swiss Re in a £3.2bn cash and shares deal.
The proposed acquisition comes five months after Swiss Re pulled the proposed flotation of ReAssure in London citing a lack of investor interest.
After pulling the float, Swiss Re said that it still wanted to dispose of the business, saying that the Swiss capital rules were not ideal for a UK-based life insurance company.
Phoenix and ReAssure both specialise in buying up old books of life insurance business that other companies no longer want. The market for these books has been growing as insurers look to free up capital and make their balance sheets more efficient.
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The two companies have battled over assets in the past, most notably in 2015 when Phoenix lost out to ReAssure — then called Admin Re — in a £1.6bn deal for Guardian Financial Services.
The transaction values ReAssure at £3.25bn, Swiss Re said on Friday. Swiss Re and Japan’s MS&AD, which also owns a stake in ReAssure, will receive £1.2bn in cash and the balance in Phoenix shares. Together, the two will own 28 per cent of Phoenix, and both companies will have a seat on the company’s board.
“We believe this transaction maximises long-term value for Swiss Re shareholders,” said chief executive Christian Mumenthaler.
The deal is the third big acquisition for Phoenix in recent years, and comes just months before chief executive Clive Bannister is due to retire and hand over to Andy Briggs.
Last year Phoenix paid £3.2bn for Standard Life Aberdeen’s insurance business and in 2016 the company bought Abbey Life from Deutsche Bank.
Swiss Re was advised by Fenchurch Advisory Partners.