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Swiss Re cuts stake in Phoenix Group to 6.6%

23rd June 2021 - Author: Luke Gallin

Reinsurance giant Swiss Re has successfully reduced its shareholding in Phoenix Group Holdings plc by roughly 6.6% by selling 66,199,917 shares in the firm for £437 million.

Swiss ReSwiss Re acquired a stake in the company last year through the sale of its ReAssure Group plc subsidiary to Phoenix.

The sale was completed through an accelerated bookbuilding process and was done in the context of a regular review and rebalancing of Swiss Re’s investment portfolio and is consistent with the group’s overall investment strategy.

Swiss Re states that Phoenix agreed to Swiss Re completing this transaction prior to expiry on July 23rd 2021 of the lock-up arrangement agreed between the pair.

The sale of an approximately 6.6% holding by Swiss Re is expected to close on June 25th, 2021.

According to the reinsurer, this transaction will result in a low single-digit increase in the Group’s Swiss Solvency Test ratio, while the impact of the deal on Swiss Re’s US GAAP earnings is expected to be insignificant.

Once the deal closes, Swiss Re’s remaining stake in Phoenix will be roughly 6.6% of the firm’s total issued share capital. Regarding these shares, Swiss Re has agreed to a lock-up arrangement of 90 days following closing, subject to waiver, as is customary for such a trade.

Additionally, now that Swiss Re’s holding in Phoenix has dipped below 10%, the relationship agreement ceases to be effective and Swiss Re is no longer entitled to appoint a non-executive director to the Phoenix Board.

Consequently, Swiss Re has informed that its nominated representative, Christopher Minter, will step down from the Phoenix Board with effect from settlement of the shares sold by Swiss Re.

Nicholas Lyons, Phoenix Chairman, commented: “On behalf of the Board, I would like to thank both Christopher for the significant contribution he has made since joining the Board in July 2020 and Swiss Re for its support during its time as a significant strategic shareholder.”

As part of last year’s deal, Swiss Re transferred shares representing roughly 14.5% of the enlarged share capital of Phoenix to MS&AD Insurance Group Holdings, ReAssure’s minority shareholder.

Phoenix notes that MS&AD, whose lock-up period also expires in July 2021, continues to retain a 14.5% stake in Phoenix and is committed to its strategic relationship.

Commenting on the sale of some of Swiss Re’s stake in Phoenix, Moody’s Investors Service analyst, Dominic Simpson, said: “Swiss Re has halved its shareholding in Phoenix Group to 6.6%, equivalent to £437 million, which we view as credit positive in that it will reduce Swiss Re’s asset concentration and have a small positive impact on it solvency.”

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