By Pietro Lombardi
Swiss Re AG (SREN.EB) has agreed to sell its U.K. closed-book business ReAssure to Phoenix Group Holdings PLC (PHNX.LN) in a deal valued at 3.25 billion pounds ($4.27 billion).
The Swiss reinsurance giant will receive GBP1.2 billion in cash and the rest in Phoenix shares, with Swiss Re getting a stake of 13% to 17% in the U.K. company. It will also have a seat on the board, Swiss Re said Friday.
As part of the deal, Swiss Re will reacquire the 25% ReAssure stake held by MS&AD Insurance Group Holdings Inc, worth GBP1 billion.
The deal should be closed by mid-2020.
Swiss Re will give an update on the use of the proceeds with its full-year results. The decision will take into account the company's capital position at the end of the year, it said.
The sale is expected to boost the reinsurer's capital, adding 12 percentage points to its Swiss Solvency Test ratio. It will also generate an economic profit of roughly $300 million.
"We believe this transaction maximizes long-term value for Swiss Re shareholders," Chief Executive Christian Mumenthaler said. "Swiss Re's goal has been to deconsolidate ReAssure, and we are pleased to have found a strong buyer for the business."