ReAssure valued at £3.25bn in proposed acquisition

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As part of the agreement, which values ReAssure at £3.25bn, Swiss Re will receive a cash payment of £1.2bn, shares in Phoenix representing a 13% to 17% stake and be entitled to a seat on its Board of Directors.

The acquisition brings additional scale to Phoenix's Heritage business, creating an enlarged Group with £329 billion of assets under administration and 14.1 million policies, confirming Phoenix's position as the largest life and pensions consolidator in Europe.

The deal would also add £84bn of assets under administration and approximately 4.1 million policies. ReAssure's minority shareholder, MS&AD Insurance Group Holdings Inc, will receive shares in Phoenix representing an 11% to 15% stake.

"There are too many insurance companies in a market which is consolidating and we are the natural beneficiaries", outgoing Phoenix Chief Executive Clive Bannister told a media call on Friday.

Phoenix expects the proposed acquisition to generate additional cash flows of approximately £7bn, of which around £2.7bn is expected to be generated between 2020 and 2023. 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%.

The group's estimated Solvency II Surplus as of 30 September 2019 is expected to increase from £3.0 billion to £4.2 billion on a pro-forma basis, giving a shareholder capital coverage Ratio of 148 per cent. Together, this enables us to maintain our balance sheet strength.

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".

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.

Swiss Re has announced an agreement to sell its subsidiary ReAssure Group plc to Phoenix Group Holdings plc.

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 deal comes almost six years after Phoenix and ReAssure first discussions of a potential merger.

Completion of the deal was targeted for mid-2020, pending shareholder approval.

Aviva and M&G are among a group of large insurers with substantial legacy books of insurance business that analysts have speculated could hit the market.

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