The board of Phoenix Group Holdings has announced the proposed acquisition of ReAssure Group for £3.2bn.

The deal confirms Phoenix as Europe’s largest life and pensions consolidator, and the acquisition is expected to generate additional cash flows of approximately £7bn over time, of which approximately £2.7bn is expected to be generated between 2020 and 2023 and a further £4.3bn from 2024 onwards.

Cost and capital synergies of £800m are expected by leveraging Phoenix’s highly efficient operating model and approach to capital management. The acquisition will also add £84bn of assets under administration and approximately 4.1 million policies.

Phoenix Group’s estimated Solvency II surplus as at 30 September 2019 is expected to increase from £3bn to £4.2bn on a pro-forma basis giving a shareholder capital coverage ratio of 148%.

Phoenix Group’s CEO Clive Bannister said the deal will give the group “an enhanced platform to pursue further growth opportunities, including bulk purchase annuities. We also welcome Swiss Re and MS&AD as significant new shareholders and see their investment as a recognition of the many benefits that this combination can bring”.

This article first appeared on our sister title, Insurance Asset Management.

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