Swiss Re to Sell U.K. Insurer ReAssure to Phoenix Group for $4.3B in Cash, Shares

December 6, 2019

Swiss Re announced an agreement to sell its U.K. life subsidiary ReAssure Group plc to Phoenix Group Holdings plc.

As part of the agreement, which values ReAssure at £3.25 billion ($4.3 billion), Swiss Re will receive a cash payment of £1.2 billion ($1.6 billion), shares in Phoenix representing a 13% to 17% stake and be entitled to a seat on its board of directors. ReAssure is a life and pensions company that buys and administers closed books of business from other companies.

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%.

As part of the transaction, Swiss Re will reacquire the 25% stake in ReAssure currently held by MS&AD. The consideration for this purchase will be Phoenix shares with value of up to £1.0 billion ($1.3 billion) at signing. This represents a £100 million ($131.4 million) premium to MS&AD’s cost base for its holding in ReAssure.

Christian Mumenthaler, Swiss Re’s group CEO, said: “We believe this transaction maximizes long-term value for Swiss Re shareholders. Swiss Re’s goal has been to deconsolidate ReAssure, and we are pleased to have found a strong buyer for the business. The strategic rationale for the combination of the businesses is compelling….”

Swiss Re said the transaction will reinforce Phoenix’s position as Europe’s largest life and pensions consolidator with £329 billion ($432.2 billion) of assets under administration and more than 14.1 million policies, giving it an enhanced platform to pursue further growth opportunities.

Swiss Re in July called off a London IPO of ReAssure, citing weak investor demand.

Thierry Léger, CEO of Swiss Re’s Life Capital Business Unit, said: “The expertise of ReAssure’s team combined with that of Phoenix will create a very powerful closed book consolidator. At the same time, the sale will accelerate the transition of Life Capital towards a dynamically growing digital B2B2C business that leverages technology and data.”

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. It is currently estimated that the transaction will result in a 12 percentage points increase in Swiss Re’s Group Swiss Solvency Test (SST) ratio and generate economic profit of US$300 million.

An estimated U.S. GAAP pre-tax charge of approximately $300 million in the fourth quarter 2019 mainly reflects the higher consolidated book value of ReAssure, driven by historically low interest rates. The impact of the re-acquisition of shares from MS&AD will be reflected in the group’s shareholders’ equity.

The transaction is expected to close in mid-2020, subject to approvals by Phoenix’s shareholders, regulators and anti-trust authorities.

Photograph: Swiss Re AG’s headquarters in Zurich, Switzerland. Photographer: Philipp Schmidli/Bloomberg.


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